Quote of the week, from a release from Gov. Jim Justice’s reelection campaign: “West Virginia’s coal industry, which was on life support during Barack Obama and the Democrats’ War on Coal, is seeing a revival under Jim Justice’s leadership. The governor led the fight to reduce the coal severance tax, and just this week helped pass a bill to save the Pleasants Power Station. The results speak for themselves — under Jim Justice’s administration, West Virginia’s economy is booming.”
Which begs the question, if the War on Coal is over, why the necessity to give a $60 million annual tax break to the “booming” coal industry, and a $12.5 million annual tax cut to keep open an aging coal-fired power plant?
The Pleasants Power Station bailout bill is troubling for a number of reasons, not the least of which being the rapidity with which it passed the Legislature: Justice added the legislation to the special session call on Friday evening, most members first saw the bill Sunday evening or Monday morning, and by Tuesday afternoon, it was on its way back to the governor for him to sign.
Certainly, that did not permit more than cursory cost-benefit analysis of the tax cut — in spite of calls for thorough economic analyses in light of the failure of $125 million a year of business tax cuts in 2008 to generate much in the way of economic activity.
While the coal industry may be in its death throes, it still yields enough influence over the Legislature that the bill passed both houses by large margins, with lip service given to saving jobs and leveling playing fields.
Given that West Virginia is a small state, its total population barely enough to equal a respectable metro area in most parts of the country, certain interrelationships are inevitable.
Nonetheless, there are a number of troubling coincidences with the bailout bill.
According to records, two of the largest mines providing coal to the Pleasants Power Plant are the Marshall County Mine, and the Powhatan No. 6 Mine. Both are Murray Energy operations, a company whose CEO is Bob Murray, a longtime advocate of lowering coal severance taxes, and a major contributor to the dark-money 1863 PAC. That PAC used its money and influence to get Roger Hanshaw elected as House speaker over a more moderate (and vastly more experienced) Eric Nelson.
Also worth noting, Justice’s bill-signing ceremony for the bill lowering the severance tax on steam coal was staged at a Murray Energy mine in Marion County.
A day after the bailout bill passed, Murray hosted a private fundraiser for President Donald Trump in Wheeling, attended by Republican luminaries, including Justice.
Also, Pleasants Power Station is owned by FirstEnergy Solutions, an Ohio-based outfit that, as part of its Chapter 11 bankruptcy filing, is seeking $3.1 million from Bluestone Energy Sales over alleged coal stockpiles that Bluestone wouldn’t buy back. Bluestone, of course, is part of Justice’s coal empire.
Which raises the question, will Justice allow the bailout bill to become law without his signature, as he did with the bill legalizing sports betting at state casinos to avoid the appearance of a potential conflict of interest as owner of the casino at The Greenbrier?
An even more troubling question would be raised if the claim against Bluestone Energy were to disappear at some point, quid pro quo style.
As noted, when you weave a web that is as small as West Virginia, entanglements probably are inevitable.
And while the Legislature failed to do due diligence on the two bailout bills, it should become evident in due time whether they were effective in preserving jobs and communities, or merely allowed coal executives to line their pockets one last time.
Republicans were once known as the party of fiscal conservatism at both the state and national levels, but no more.
Nationally, the party that sounded alarms over growing deficits and national debt now shrugs its shoulders and takes a “what, me worry?” attitude to looming trillion-dollar deficits.
Back home in West Virginia, just three years removed from the 2016-17 austerity budget of $4.187 billion — a budget that cut general revenue spending by $110 million and prompted a three-month budget impasse resolved only after House Republicans reluctantly voted for a $98 million tobacco tax increase — legislators passed the current state budget, totaling $4.396 billion.
(A year after the 2016-17 budget, House and Senate leaders proposed cutting spending even further, to $4.102 billion, prompting Justice to use a silver platter of bull manure to express his disdain over what he called the bill’s devastating cuts to higher education, tourism, and veterans’ programs. After a second budget impasse in as many years, they eventually settled on a $4.225 billion budget plan.)
Spending in the current base budget is about 5 percent higher than the 2016-17 plan, which seems reasonable, accounting for inflation, and with two years’ worth of pay raises for public school and state employees included.
However, that doesn’t tell the whole story, since between the regular and special session, legislators also approved an additional $375.8 million of spending through supplemental appropriation bills.
That brings the total general revenue appropriations for 2019-20 to $4.771 billion — up 14 percent over the 2016-17 budget.
Key supplement appropriations include $105 million into a Public Employees Insurance Agency reserve fund, partially fulfilling a promise Justice made to set aside $150 million to offset future cost increases for the state-managed health insurance plan for teachers and other public employees.
(FYI, when the PEIA Task Force last met, indications were that they would be announcing a time for the next meeting shortly. That was on Jan. 8.)
There’s also a total of about $104 million for Highways, to gear up the governor’s mandate to fix deteriorating secondary roads statewide.
(Last week, Justice announced that since March, road crews had paved 1,000 miles of roads and patched 7,000 miles. Actually, the paving number is in lane miles, meaning that they’ve done 500 miles of two-lane roads or 250 miles of four lanes, or some combination thereof.
To put those figures in perspective, keep in mind that the state maintains more than 34,000 miles of roadways, so that means crews have paved about 1 percent of the roads, and patched about 20 percent. Gonna take a heck of an effort to get those numbers up to something that most West Virginians will be able to appreciate before November 2020.)
Meanwhile, in some cases, budget items normally funded in the budget bill were paid for through supplementals, like $7 million for Tourism advertising and marketing, and $1 million for Health Right free clinics.
Likewise, it would be hard to argue against the worthiness of many of the programs funded with supplementals, including about $7 million total for drug addiction prevention and recovery programs, $3.5 million for safe schools initiatives, and $7.4 million to upgrade transmitters for the three West Virginia Public Broadcasting television stations with technology that, among other things, will allow you to pick up over-the-air broadcasts on your smartphones, tablets and personal computers.
For many years when they were the minority party, House and Senate Republicans would hold a news conference at the start of each legislative session to announce their legislative agenda.
While some issues would vary from year to year, two were inevitable: Tax cuts and reduced government spending.
One year, the Associated Press account of the news conference said it was focused on “taxes, taxes and more taxes,” in terms of cuts.
In 2002, then-House Minority Leader Charlie Trump, R-Morgan, said there is only one way to deal with growing state budgets: “We’re going to have to trim this government. It’s hard because it has effects on people, but the alternative is less acceptable. We can’t run deficits and we can’t let the government swallow the whole state.”
Wonder what young Charlie Trump would have to say about 14 percent growth in state government spending?
Finally, given the controversy swirling around construction of the Rockwool plant in the Eastern Panhandle, Delegate Paul Espinosa, R-Jefferson, might have been well advised to seek guidance from the state Ethics Commission before going to work as the company’s public affairs manager.
When a prominent private-sector business hires a legislator, it inevitably raises questions as to whether the hiring was based on merit, or to gain influence in Charleston. It’s not uncommon for legislators to seek the commission’s advice as to whether a private-sector job opportunity might pose ethical issues.
(Heck, now-Justice Tim Armstead sought employment advisory opinions twice, when he became House speaker and when he was considering a job offer from a law firm that also employs legislative lobbyists. He later withdrew that request, and finished out his term living off his legislative salary to avoid potential conflicts.)
As best as I can determine, Espinosa did not make such a request. We know the Ethics Commission did not meet in July because it had no matters pending, and Espinosa is not on the August agenda.
Espinosa did not respond to a request for comment.