Ever since Fanny left the Charleston Gazette decades ago, Phil
Kabler has stepped up to the plate and provided real insight on
what's really going on, at least politics wise, West Virginia. For
our distant readers, take a gander... Here's an installment
of the Statehouse Beat published on Aug 8th.
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.”
Uh-oh.
•••
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.
Reach Phil Kabler at philk@hdmediallc.com,
304-348-1220 or follow @PhilKabler on Twitter.