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Editorial: What Southwest Va. should demand in return for abolishing the coal tax credit

Editorial: What Southwest Va. should demand in return for abolishing the coal tax credit

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Earlier this week we wrote about how two legislators from some of the most affluent parts of Virginia want to do away with the coal tax credits that prop up the signature industry in the poorest part of the state.

Often our editorials discomfit those on the right. That particular editorial discomfited some on the left.

Today we’re going to write more about that effort to do away with coal tax credits and we suspect those on the left will be even unhappier, although we don’t think they should be.

To recap: Virginia Democrats have wanted to do away with the state’s coal tax credits for years now for the obvious reasons. They’re not keen on fossil fuels. Last year they picked up a powerful talking point when the General Assembly’s watchdog arm, the Joint Legislative Audit and Review Commission, produced a report that basically said a) coal tax credits haven’t kept the coal industry from declining and b) those credits actually cost the state more money and jobs than they save. The specific bottom-line from JLARC analysts: The coal-tax credits cost the state $21 million in gross domestic product, $5 million in personal income and 35 jobs.

You’ll find no defense of the coal-tax credit here. The numbers are what they are. It makes no sense for the state to pour money down a money-losing hole. Market forces are conspiring against coal and no tax credit is going to save it (although, to be fair, the few coal jobs that remain are some of the best-paying jobs in the region and those wages are not easily replaced). The U.S. Energy Information Administration reports that last year coal — once the nation’s dominant form of energy — has now fallen to third place and accounts for just 20% of the nation’s energy. That puts coal in a tie with renewables — and every day renewables become even cheaper.

Travis Hackworth, the Republican candidate for the state Senate seat left vacant by the death of Ben Chafin, R-Russell, has called for delaying any vote on abolishing the coal-tax credit until that seat is filled. Hackworth has a strong case. Some 90% of the state’s coalfields fall in that district and Gov. Ralph Northam — who called very short special elections in Democratic districts — has curiously set a lengthy campaign here. That seat won’t be filled until March 23, after this year’s session is done. It should give Democrats pause that the two legislators championing the coal tax credit abolition, which is perceived as a negative in the poorest parts of the state, come from some of the wealthiest districts in the state — Del. Sally Hudson from Charlottesville and state Sen. Jeremy McPike of Prince William County. That’s not a good look; their districts don’t have to worry about the consequences of coal’s demise. It seems even more impolitic to move against coal tax credits when the Southwest delegation is short-handed.

However, Southwest legislators — or, in the case of Hackworth, a potential legislator — shouldn’t waste of their precious political capital defending coal tax credits. It might be good politics on the campaign trail (Hackworth faces Democrat Laurie Buchwald of Radford) but it’s bad economics. Saving the tax credit won’t save the economy of the coalfields. So what will?

Hudson modified her bill this week to make it more palatable to some legislators. It now calls for the state Department of Mines, Minerals and Energy, in coordination with four economic development agencies and one environmental group, to “convene a stakeholder process” — complete with “public meetings and public comment opportunities” — and produce a report by Dec. 1 “on recommendations for how the Commonwealth can provide economic transition support to the coalfield region, with a particular focus on workforce redevelopment, economic diversification, reclamation of coal-impacted lands and brownfields, community revitalization, infrastructure improvements, and clean energy development.”

This is positively Shakespearean. Unfortunately, it’s the part of Shakespeare where Hamlet mocks the long-winded Polonious: “Words. Words. Words.”

So what Southwest Virginia gets out of this is another study? This is well-intentioned but laughable. Southwest Virginia does not lack for studies. The GO Virginia economic council produced a mighty fine one a few years ago. Maybe this one will be scathingly brilliant and unearth some heretofore undiscovered insight about how the coalfields can build a new economy. More likely, well, we all know what happens to most studies.

What the region needs isn’t “words, words, words” but “money, money, money.” Southwest Virginia legislators shouldn’t accede to some feel-good language about a “stakeholder process”; they should scream bloody murder and extract as much money from the state as they can— call them reparations if you will. The move to sunset the coal tax credit isn’t a threat; it’s an opportunity. That will require Republican legislators to think like Democrats — but it also means that Democrats need to think more like Democrats. Want to redistribute the wealth? Here’s a fine place to do that.

The region’s main economic development entity — the Virginia Coalfield Economic Development Authority — currently gets about 20% of its funding from the coal tax credit. At the very least, the state should commit to replacing that funding as part of any tax credit abolition. But that’s just the starting point. Between 2010 and 2018 the state has spent $314.6 million on coal tax credits. How about committing at least that much to creating a new economy to replace coal? As a candidate for governor, Ralph Northam proposed turning the University of Virginia’s College at Wise into a research university with the idea that it would become a new economic engine in the region. How about committing the funding to that? The coalfields have some of the lowest educational levels in the state — 9.3% of adults over 25 in Dickenson County have a college degree versus 78% in Falls Church. How about creating a fund to pay for anyone in coal country to go to community college? How about creating a trust fund for economic development similar to the tobacco commission except specifically dedicated to coal country? How about Richmond putting a specific number of state jobs there? The region doesn’t lack for ideas; it lacks the resources to make them happen.

If the state wants to commission a study, fine, commission a study. But a study without funding attached is an empty promise. Southwest Virginia shouldn’t settle for that. It should demand dollars.

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