Two bills with significant implications for small businesses met different fates in the Virginia Senate, as the General Assembly completed its legislative session late Wednesday.
The Senate’s resounding rejection of a proposal by Gov. Ralph Northam to require businesses to offer a new state-run retirement account to part-time employees was hailed as a victory by small-business advocates.
But the Senate also closed the door on the legal operation of electronic skill games that have become a mainstay for thousands of convenience stores and restaurants — as well as a boost to the state budget during the COVID-19 pandemic.
“Give these small businesses a break,” asked Sen. Joe Morrissey, D-Richmond, who voted against a proposal by Northam to strip language from legislation that would have allowed the skill games to continue operating for another year.
Neither vote was close — the Senate voted 29-11 to reject the governor’s attempt to include part-time employees in the new VirginiaSaves retirement program and 28-11 to endorse his amendment to end skill games — but neither initiative is going away.
“To me, that’s very disappointing,” House Appropriations Chairman Luke Torian, D-Prince William, said Thursday in response to the Senate vote to exclude part-time workers from the VirginiaSaves program he had proposed. “At a time when we should be helping individuals, we’re not doing that.”
Torian said he would continue to advocate for an estimated 156,000 part-time employees to take advantage of the option of saving for retirement through an individual retirement account that the Virginia College Savings Plan will establish by 2023 for all businesses with 25 or more full-time workers.
The National Federation of Independent Business cheered the Senate decision on part-time workers as a way to reduce the administrative burden of a new state mandate on small businesses that are already struggling because of the public health emergency.
The law requires businesses with 25 or more employees to offer the IRA, but not to contribute to it.
“Our small-business owners are still focused on recovering from the COVID-19 pandemic,” said Nicole Riley, state director of the business federation in Virginia. “The last thing they need is a government-mandated program that requires them to fill out additional paperwork and spend time away from what they do best: creating jobs for Virginia’s economy.”
Sen. Chap Petersen, D-Fairfax City, had led the effort in February to limit the retirement savings program to full-time employees and raising the threshold for participation from five to 25 employees.
“We all know the distinction between full-time and part-time employees. ... This is a policy choice,” Petersen said Wednesday.
Petersen’s amendments exclude about 500,000 employees — either part time or workers for small firms — out of the 1.2 million originally affected by the bill, according to the Pew Charitable Trusts, which advocated for the program.
“There are people in the state who do not have access to a full-time job,” said Sen. Jennifer Boysko, D-Fairfax, who fought for the governor’s amendment.
Separately, Senate Finance Chairwoman Janet Howell, D-Fairfax, and Senate Minority Leader Tommy Norment, R-James City, led the push to end the legal operation of skill games that had come into Virginia unregulated through a legal loophole that operators said distinguished them from illegal games of chance.
The gaming terminals became known as “gray machines” because of the murky distinction.
Sen. Jeremy McPike, D-Prince William, who led a subcommittee last year on skill games, casinos and other forms of gambling being considered by the assembly, denounced the lobbying tactics of skill game operators as “despicable.”
The assembly voted to ban the games a year ago, but Northam offered them another year to operate legally, regulated and taxed to generate revenues to offset the costs of the pandemic and delay the loss of the gaming revenue by small businesses. The legislature agreed to the one-year extension last spring after the governor promised to block any attempt to let the games continue beyond June 30, 2021.
Skill game operators estimate the industry could generate $150 million a year that the state could use for anything from school modernization to college scholarships, but the assembly budgeted an expected $105 million from a new tax on the games. The budget will use the money to help public school divisions address “learning loss” during the pandemic and give small businesses money to rebuild.
Sen. Bill Stanley, R-Franklin County, denounced the decision by the governor and the assembly to ban the skill games while legalizing casino gambling in five cities, potentially to include Richmond.
“Have we chosen big casinos over small businesses?” Stanley asked.
Queen of Virginia Skill & Entertainment, the single-biggest skill game operator in the state with more than 6,000 machines, has focused its lobbying on the importance of the games to store and restaurant owners, many of them of Indian, Asian or African descent.
“They’re taking it personally,” said Randy Wright, a former Norfolk city councilman and former Virginia Lottery deputy director who is lobbying for Queen of Virginia. “This is a direct hit at them.”
Wright confirmed skill game operators had lobbied for the language that Northam struck from a bill proposed by Del. Don Scott, D-Portsmouth, that will impose a civil penalty on operators of gaming devices in unregulated locations. The stricken language would have allowed skill games to continue in regulated locations through June 30, 2022.
“Kind of late in the game, but yes,” he said.
Queen of Virginia and other operators aren’t giving up the fight to keep skill games legal in Virginia. The General Assembly is likely to meet in special session in June to elect judges to the Virginia Court of Appeals and decide how to spend billions in federal aid to Virginia under the American Rescue Plan Act.
“It ain’t over until it’s over,” Wright said. “There are other options available, and certainly, we’re going to be sorting through them.”