TAZEWELL, Va. — A funding source to help economic development in Southwest Virginia appears to be gone, with nothing so far left to replace it.

The General Assembly voted to end the Coal Employment and Production Incentive and the Coalfield Employment Enhancement tax credits after tax year 2021 and prohibit allocation of the credits after Jan. 1, 2022.

That amounts to about $7.5 million annually.

That money has been going to Southwest Virginia counties to boost the coal industry and economic development, including funding for VCEDA (Virginia Coalfield Economic Development Authority) which routinely awards money to help small businesses.

But the question now is where the money will go that Virginia will save on ending the tax credits.

Gov. Ralph Northam proposed an amendment to the bills to divert those funds to UVA at Wise, but the Senate last week rejected the amendment.

Boards of supervisors in Tazewell, Buchanan and Russell counties recently passed resolutions opposing the Senate and House bills to end the coal tax credits, but to no avail.

Tazewell County Board Chair Tom Lester made his position clear.

“HB 1899 and SB 1252 would impose substantial, devastating impacts upon Southwest Virginia’s coal industry and the great number of businesses that rely heavily upon it,” he said. “Should Governor Northam be inclined to sign the bills into law, a committee has already been designated under the bills to determine how to best spend budgeted funding. Allocating the budgeted amounts to the University of Virginia’s College at Wise, without considering input from the statutorily created committee, would be premature. There are a multitude of needs in Tazewell County and in Southwest Virginia that could be addressed with such substantial funding.”

The resolution says Northam’s “proposal to allocate the projected revenues from said tax credits to an institution of postgraduate education in Southwest Virginia, the Board finds that such recommendation is untimely and premature without consultation among all stakeholders in Southwest Virginia.”

The writing may have been on the wall for the coal tax credits last year when the Joint Legislative Audit and Review Commission concluded the tax credits were not getting a return on the money, that it cost the state more than any jobs it may save.

According to the report, during fiscal years 2010 to 2018 Virginia spent about $315 million on the tax credits, but the commission estimated fewer than 10 jobs were created.

“Coal tax credits are no longer relevant and should be eliminated,” the report said.

That is what concerned Eastern District Supervisor Charlie Stacy, who said last week he is afraid Southwest Virginia, which continues to need help in economic development, will be short-changed.

“We may end up not getting anything,” he said. “VCEDA helps a lot of businesses.”

But Del. James W. (Will) Morefield (R-Tazewell County) retains some optimism.

“The coal tax credit program plays an integral role in economic development funding for eight localities in Southwest Virginia,” he said, adding that VCEDA receives a percentage of the funding and uses the money to provide much needed economic development assistance to some of Virginia’s most economically distressed areas.

“Without the funding most of these localities would not have the resources to incentivize companies to locate to Southwest Virginia,” he said. “Projects such as Project Jonah, which is currently under construction and will be the world’s largest indoor vertically integrated salmon aquaculture facility, would not have come to fruition without the support from such economic development funding. Four out of five of the coal producing counties which produce over 90 percent of the coal in Virginia passed resolutions objecting the Governor’s amendment.”

Morefield said Northam’s amendment proposed the legislature commit those funds in a future General Assembly session to the University of Virginia College at Wise.

“It was communicated to me the coalfield counties and affected stakeholders want to provide input on the best use of those funds before the General Assembly makes a commitment,” he said. “This makes sense to me and it did to the majority of the members of the House and Senate.”

Morefield said he has heard some people say that all hope is lost on restoring the coal tax credit program.

“But I would strongly disagree,” he said. “The balance of power always swings like a pendulum from one party to another and I anticipate we will regain the (Republican) majority again probably sooner than later. We cannot and must not throw in the towel and just walk away. The coalfields of Virginia and West Virginia cannot take that risk. We must continue to make every effort to improve our region.”

— Contact Charles Boothe at cboothe@bdtonline.com

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