Democrats in the House of Delegates gummed up Gov. Jim Justice’s efforts to rush through a renewal of a tax credit program that The Greenbrier resort — which Justice’s family owns — could use to save millions of dollars.
More than any issues with the Tourism Development Tax Credit program itself, House Democrats focused on the whiplash of Justice calling for a special session and requesting the legislation on Thursday.
To pass the tax credit renewal in one day, delegates would have needed a four-fifths supermajority vote to suspend the House’s usual rules. As voting fell mostly along party lines on the House floor, they didn’t get close to that.
Earlier this year, lawmakers passed a bill requiring the state to disclose which businesses claim the tourism tax credits and how much they are claiming. That disclosure is due Dec. 1.
So what’s the rush, Delegate Isaac Sponaugle, D-Pendleton, asked in committee. He noted the looming disclosure report, and the fact the tax credit program doesn’t expire until the end of the year.
“I think we should have an opportunity to review it,” Sponaugle said. “We’ll be here in December.”
If the Legislature doesn’t renew the program, no new applicants would be able to obtain the credits in 2020, although applicants whose projects have been approved would still get their credits.
In discussing the bill, lawmakers were forced to ask a member of the government’s executive branch — headed by the governor — about tax credits that the state government awards to the governor’s business.
For a business to claim the tax credit, it essentially needs to demonstrate that the development has increased its sales tax revenues. The business can then claim the credit over 10 years against those sales tax payments.
For most projects, the credits can be claimed for up to 25 percent of the value of the development against sales tax revenues. But companies that develop on former coal mine sites, or on property adjacent to state and federal lands, can claim credits up to 35 percent of the cost of the development.
Delegate Daryl Cowles, R-Morgan, asked about a specific section of code that creates a special variant of the credit if the development is near a “historic resort hotel” with more than 500 rooms. That language was inserted to benefit The Greenbrier when the bill was renewed in 2014.
“Is this one of The Greenbrier ones that has been used?” Cowles said in committee.
State Tourism Director Chelsea Ruby said in committee the governor’s businesses only claim the more general tax credit. She also said he hasn’t applied for any additional credits.
“I don’t know of any intention The Greenbrier has to use these in the future,” Ruby said in response to a question from Sponaugle.
After the session, Cowles said he’d like to remove the “historic resort hotel” section outright. He wouldn’t say if it should be removed because it seems tailored to Justice’s business, or because it’s “extraneous” and unclaimed by any entity.
“I don’t know that there’s a difference at this point,” he said.
Sponaugle, who is also suing Justice for failing to live in Charleston in violation of the state constitution, also asked Ruby about Justice claiming the credits.
State officials provided a handout to lawmakers showing that Justice’s companies have not applied for any new credits since May 2015, the same month Justice announced his run for governor.
Justice companies applied and were approved for two credits at The Greenbrier: a tennis stadium and a multi-use football field. Those developments cost a combined $38.5 million.
The handout shows several developments have been approved for the credit under the Justice administration. They include a $65 million resort to be built in Milton, a $15.6 million restoration of a Morgantown hotel, a $139 million hotel in Harpers Ferry, a $5.8 million aquatic center in Lewisburg, and a $2.1 million luxury camp site in Wayne County.
Ruby emphasized the state wants to send a signal of stability to other potential developers that the credit is here to stay, should they invest in West Virginia. She said developers are touring a potential site this month, and a renewal of the program could prove to be a major draw for their investment.
Monday’s episode is the latest political headache for the governor given the sometimes-blurred lines between his gubernatorial work and his private businesses’ operations. Some top lawmakers have called for reforms in West Virginia’s governmental ethics laws after a Gazette-Mail/ProPublica investigation of Justice’s continued ownership of The Greenbrier.
Richard Cullen, a spokesman for the Justice family companies, did not answer emailed questions about current or future credits claimed by the companies.
“The Justice companies do not have any projects on the table right now that would benefit from the tax credits,” Cullen said. “If you look back over the past several years, it’s clear that the program has helped generate investment, create jobs and attract tourism.“
Earlier Monday, the state Senate passed its version of the tax credit renewal bill without a stir. Senate Finance Chairman Craig Blair, R-Berkeley, said he knows the governor claims the credits. Likewise, he knows a renewal would come before public disclosure of who’s getting what in credits.
However, he said he received assurances from the Tourism Office that Justice’s companies won’t be asking for any new credits, and the credit program is a successful tourism draw for the state.
“I’ll take whatever [development] I possibly can, especially when we’re seeing a return on investment,” he said.