I was reading the recent article by Gazette-Mail environmental reporter Mike Tony about how the anticipated Appalachian natural gas and petrochemical production boom had gone bust, and it occurred to me that over the years, a key element of the state’s economic development policy has been to hope and wish for the next big thing to come here.
About the time I arrived in Charleston some years ago, the next big thing for which the state was the Saturn auto manufacturing plant.
The now defunct automaker was looking to locate a massive auto manufacturing plant somewhere on the East Coast, and West Virginia went all out to attract the facility. Gov. Arch A. Moore Jr. and his minions dreamed up Super Tax credits to lure the plant.
Alas, the plant went to Tennessee, and the next legislative session, coal lobbyists swooped in to modify the Super Tax credits so they could be used by coal companies to complete mechanization of underground mines and to expand mountaintop mining operations.
That led to the last great plunge in state coal mining employment, and the lost tax revenue helped push the state to the brink of bankruptcy, a mess that Arch left for Gov. Gaston Caperton to clean up.
As I’ve said before, instead of wishing and hoping for a deus ex machina moment to salvage the state economy, we need a frank and objective analysis of the state’s economic landscape — an analysis that current leadership will not undertake since it would prove that their preconceived economic development policies of corporate tax cuts, deregulation, cutting public and higher education and anti-labor policies, while effective at lining the pockets of the wealthy, are not effective at growing the economy.
In the short term, the most rational behavior would be to attempt to capitalize on what few strengths we have as a state.
Tourism, clearly, is one of those strengths, and has been given a tremendous boost by the designation of the New River Gorge as a National Park.
Gov. Jim Justice may be, by far, the least competent of the six governors I’ve covered, but he is on point with his commitment to promoting state tourism — even if those efforts are primarily driven by his personal self-interests as an owner of multiple hospitality and leisure businesses, including, of course, The Greenbrier.
I believe it was the great Oshel Craigo who called tourism the clean extraction industry, because it brings people into the state, extracts money from their pockets and sends them home. A clean and neat economic engine, with no costly reclamation projects necessary on the back end.
The other strength, I believe, is retirees.
For some odd reason, Google News keeps constantly sending me items on retirement, and I detected a pattern: West Virginia tends to rank highly on lists of best places in the U.S. to retire.
In 2021, West Virginia ranked 12th overall by Bankrate, 10th by Senior Advice, third by Retirement Living, tied for first by Moneyrates and first by Blacktower Financial Management Corporation.
Generally, the lists cite West Virginia’s low cost of living, low taxes — particularly very low property taxes — outdoor recreation opportunities, relatively low crime rates and relatively good accessibility to health care.
Some lists also took climate, quality of life, percentage of senior population and other measures into consideration.
Retirement Living’s summary was typical: “West Virginia homes and senior care communities are affordable. Over 20% of the population is 65 or older, so retirees easily find peers. The West Virginia University Health System provides quality health care and dental care across the state.
The cost of living is very affordable, with low property and sales taxes. You’re within 100 miles of city conveniences no matter where you live in West Virginia.”
Retirees present immediate benefit to the state, in that many of the state’s shortcomings that resulted in West Virginia being ranked as the 47th worst state for business in CNBC’s “Top States For Business” don’t come into play when deciding where to retire.
If your working days are behind you, it doesn’t matter if West Virginia isn’t business friendly or has an undereducated, underqualified work force. Likewise, the state’s poor (and getting worse) education system should not be a factor in recruiting retirees, and since retirees are unlikely to be commuting, the poor condition of our roads should be less of a concern.
I’m no expert on this stuff, but if we’re going to effectively try to bribe young workers to move to the state, it seems sensible to try to incentivize active seniors to relocate to the state in retirement.
The cities deemed attractive to young people in the Ascend program, Morgantown, Lewisburg and Shepherdstown, are also likely to appeal to retirees, as would cities with amenities and accessible health care, like Charleston, Huntington, Wheeling and Clarksburg.
The prospects of being able to sell one’s home and move to an area where housing costs are half or less could have appeal, particularly if the state offered incentives for such a move.
And, with 401(k)s and other retirement savings plans, many retirees have accumulated nice nest eggs that could benefit the state economy if spent here.
West Virginia wouldn’t be the first state to recruit retirees. Florida’s population boom in the 1950s and 1960s was due in part to the state promoting itself as a retirement mecca. Currently, Tennessee, for one, has a “Retire Tennessee” program operated by their Division of Tourism. (The campaign promotes Tennessee’s low cost of living and abundance of outdoor and leisure activities — imagine that.)
Just a thought.
As I’ve said before, you’ve got to admire Justice’s chutzpah. When it comes to following rules, regulations, laws or standards of proper behavior, he just doesn’t give a dang.
The latest example is Justice’s appointment of retired West Virginia Coal Association President Bill Raney to the state Public Service Commission.
A coal operator appointing a coal lobbyist to a state agency that regulates (including determining shut-down dates) coal-fired power plants has got to be the trifecta of conflict of interest, but Big Jim just doesn’t care.
(Back in the day, Justice’s Southern Coal Sales used to sell a lot of coal to American Electric Power. We’ll see if Raney reopens that pipeline for Big Jim.)
Speaking of, regarding news of the IRS filing tax liens against The Greenbrier, I went back to look at some of the IRS 990 forms for Old White Charities, the nonprofit that used to put on the PGA golf tournament at the resort.
The 2020 return isn’t on file yet, but I noticed something unusual about the 2018 and 2019 filings.
Total liabilities for Old White grew from $17.14 million in 2018 to $20.18 million in 2019. Not surprising, since attendance for the 2019 tournament really tanked, as the PGA moved the event from early July to what essentially is pro golf’s off-season in September.
However, on the 2018 Form 990, most of the liabilities were debts, including a $7 million line of credit and debts to various Justice entities, including $5.59 million to The Greenbrier.
In 2019, Old White listed just one major financial liability under Part X of Schedule D, Other Liabilities: “Federal income taxes, $18,559,179.”
More insipid press: When July tax revenue numbers came out Monday, news outlets including MetroNews and WVNews took Justice at face value and dutifully reported his crowing over the state opening the 2021-22 fiscal year with a $28.1 million surplus.
Had they bothered to dig into the revenue figures, and the July revenue estimate, they would have seen Justice and the boys in the Department of Revenue had cooked the books by setting the monthly revenue estimate artificially low in order to assure that the state finished in the black.
In fact, the $277.68 million revenue estimate for July was the lowest month since February 2018, a month that, naturally, had three fewer days.
July revenue was down more than $217 million from what the state took in for June, and was more than $206 million less than July 2020 revenue. Set the bar low enough, and you can always make it look like you have a surplus.
In reality, the $305.8 million of July tax collections was a sharp drop-off from May and June collections, with the two main pillars of tax revenue, income taxes and sales taxes, showing signs of weakening.
Sales taxes in particular fell sharply, with July collections of $89.78 million missing estimates by almost $4.7 million and down $85.97 million from June’s $175.75 million and $59.75 million from the $149.83 million collected in May.
Since sales taxes are remitted to the state a month after they are collected, July numbers reflect June transactions.
June, of course, was when Justice abruptly cut off federal enhanced unemployment benefits of $300 a week.
While Justice acknowledged at the time that cutting off the benefits 11 weeks early would cost the state economy a total of $150 million, he sided with business owners who blamed lazy workers — not intolerably low wages — for their inability to fill job vacancies.
Likewise, we can assume the influx of Biden Bucks, the $1,400 federal stimulus checks sent out in the spring, had temporarily boosted state consumer activity, as reflected in May and June tax collections (for April and May sales).
Justice also touted a major upturn in severance tax collections from July 2020, claiming it showed that miners have gone back to work.
He failed to mention that July 2020 severance taxes were $6.69 million in the red, after the state made payments to localities.
Bottom line: July was not a great month for tax collections, as Justice claimed during his COVID-19 briefing Monday, but a month that could be a warning of troubling signs for the state economy.
As for the reporters who took Justice at face value, and simply reported his crowing about a strong revenue month without verification, given the nature of newsrooms across the state and across the country these days, those reporters undoubtedly had little time to file the story before they had to move on to cover the next news event.
They probably don’t have the luxury of having bosses who leave the old guy alone to pore over revenue reports and monthly estimates and crunch the numbers. And, admittedly, there are sexier stories than state revenue collections.
However, a great deal is lost when reporters are put in a position of having to function as stenographers and not reporters.