Coal Tattoo

Money for nothing?


My colleague Alison Knezevich reported in today’s Sunday Gazette-Mail about a study by the West Virginia Center for Budget and Policy that found our state government has given taxpayer-funded subsidies to companies that later cut jobs.

The study, cites only a few examples. But in my experience trying to find out where government economic development money went, I’ve learned that state officials from both political parties are very secretive about these matters. Even when they’re not, state officials have a hard time putting numbers together that show which incentive programs are working and which aren’t — let alone which specific deals worked and which didn’t.Among those that were cited in this new report and in Alison’s story was the Charleston Stamping Plant, which is certain among the nominees for poster child of jobs incentives gone wrong. As she wrote in today’s paper:

In Kanawha County, the Charleston Stamping plant received a $15 million loan from the WVEDA in May 2007, according to the report.

As of January 2009, the company had installed 45 robots on its assembly lines, the report says. Now, only 25 people work there, compared to 1,000 a few years ago.

I’ve written in recent months about the tens of millions of dollars in tax breaks the state would give to two proposed coal-to-liquids plants if those plants ever get built.

But Alison’s story reminded me more about one of the biggest and most notorious jobs incentives programs in recent West Virginia memory: The Super Tax Credits.

Gazette investigative reporter Paul J. Nyden has written repeatedly about this program. The short version of the story:

In 1985, then-Gov. Arch Moore pushed for the Super Tax Credit. He said it would help the state land a new Saturn auto plant. Saturn went to Tennessee, and most of the Super Tax Credits went to the coal industry. Coal operators bought draglines and longwall machines so they could dig more coal with fewer miners. Between 1985 and 1988 alone, coal companies received $35 million in Super Tax Credits. At the same time, industry employment dropped by roughly 1,300 jobs. Between 1988 and 1997, the program cost the state $622 million.

In any event, the new study, “Money for Nothing,” (warning: Click here only if you want to see the old Dire Straits video by the same name) might generate some discussion among lawmakers about how the state uses its economic development funds.