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Spirit of Jefferson Farmers Advocate
Charles Town, West Virginia
December 27, 2012     Spirit of Jefferson Farmers Advocate
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December 27, 2012

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i! ' ' f{ PAGE "No government ought to be without censors and where the press is free. no one ever will." - Thomas Jefferson ~plrlt of JEFFERSON and FARMER'S ADVOCATE Thursday, December 27, 2012 SCAN ()q,EARY Richard Pryor famously joked about a husband caught in bed with another woman by his wife. Rath- er than try to explain the inexplica- ble, the husband indignantly denies having an affair and even the exi~ tence of the woman beside him in bed. "Who you gonna believe, me or your lying eyes?" he demands. That is also the approximate re- action of West Virginia Commerce Secretary Keith Burdette to a recent New York Timesstory that shows West Virginia hands out $1.57 bil. hon annually in tax exemptions, credits, and other subsidies to busi- nesses with the ostensible goal of stimulating economic growth and jobs. The result? West Vngirtia has had no net j6b growth in more than a decade. The Times report, written by Louise Story, Tiff Fehr and Derek Watkins, is important because, if it's accurate, West VLrginia gives away more than a third of its an- nual tax revenue even as the state cuts services for a population that is among the poorest, least educated, and least healthy in the nation. That's probably why Burdette felt compelled to respond to the Times story. As reported by the Associated Press and "Under the Dome" col- umnist Tom Miller, Burdette told the Legislature's Joint Commission on Economic Development and the Joint Committee on Finance that the Times article was "poorly re- searched and reported" and present- ed a "woefully inadequate picture" of the'state's use of tax incentives. Burdette went on to say that the state issued only $83 million in tax credits last year and that $1.12 billion in sales tax exemp- tions shouldn't count as subsidies because the exemption is a stan- dard. piece of tax pohcy that exists in many states. The purpose is to avoid "double taxation" on interme- diate goods and services that would otherwise be taxed again on sales to end-users. Moreover, he argued the $!.12 billion figure was exaggerat- ed because the Times chose to re- port on a year, 2009, when power companies were making unusually large purchases of pollution control equipment. For these reasons, Bur- dette concluded, suggestions that West Vtrginia is second in the na- tion in the level of subsidies provid- ed to business are misguided. However, as impressive as Bur- dette's argument sounds, it's really nothing more than a complex if less funny variation on, "Who you gon- na beheve, me or your lying eyes?" Here's why. First, Burdette didn't actually question the accuracy of the figures in the Times report. He was rele- gated to contextual objections be- cause the Times supplemented its report with an online database that lists and quantifies each of the cred- its, grants, and other subsidies that comprise the $1.57 billion total. To address the question of whether the $1.12 billion sales tax exemption counts as an incentive, I'll turn to another Sean O'Leary. Sean O'Leary, the smarter, is a policy analyst at the West Virgin- ia Center on Budget and Policy. In a recent blog post, he makes three points. First, the sales tax exemp- tion, qr "direct use exemption" ap- plies only to specified businesses and industries, not all. Second, the state's 2010 Tax Expenditure Study explicitly says that, in addition to avoiding double taxation, the direct use exemption exists to "encourage investment in eqmpment and facili- ties by qualified industries." Final- ly, while most states have compara- ble policies, not all do. In summary, .O'Leary writes, "The direct use exemption meets all the definition(s) of a tax incentive: it is a tax preference for certain tax- payers engaged in certain activities, it is designed to encourage those activities, it saves businesses mon- ey compared to other states, and it deprives the state of asubstantial amount of revenue." O'Leary also addresses the ques- tion of whether the $1.12 billion in sales tax exemptions in 2009 was an aberration as Burdette claimed. He writes, "The sales tax exemption is examined every three years, and the 2007 Tax Expenditure Study valued the direct use sales tax exemption at $1.1185 billion, with only a 4.9 per- cent increase from 2007 to 2010, which suggests that the 2010 figure was not excessively inflated." In other words, The New York Times was right and, along with O'Leary, provides dOcumentary evidence to prove it. West Virginia passes out $845 in business subsi- dies for every resident of the state and, if these incentives were listed as an expenditure in the state bud- get, they would constitute the single largest line item exceeding even ed- ucation and health care. Plus, there's another aspect of the story that has gone largely unad- ; , .' dressed-the state s unwillingness to share information about the business incentives it doles out and an associ- ated absence of accountability. In September the West Virginia Center on Budget and Policy pre- pared a presentation that concluded the state's "Tax Credit Review and Accountability Report" fails to pro- vide data or analysis to determine if tax credits lead to additional jobs or economic impact, is only published every three years, includes only four business tax credits out of doz- ens of programs and does not dis- close the recipients of the credits. Meanwhile, the New York Times database lists 19 incentive programs for which the Commerce depart- ment refuses to make spending in- formation available. That means the $1 _57 billion figure is a floor rather than a ceiling on how much West Virginia metes out to businesses. When asked to provide informa- tion about the missing 19 programs and any information refuting data presented by the Times, Burdette and the state Development Office failed to respond. Maybe they're afraid we'll be- lieve our lying eyes. -- Sean O'Leary can be contacted at seanoleary@citlink~tet. A ver- sion of this column containing links to references and statistical sources may be found at wwwIhe-state-of- my-state .com. ELLIOT SIMON "O a 1s Here's some statistics that you1972. West Virginia had the sec- through 24-hour availability of might f'md as unsettling as I do. ond highest increase in the nation magistrates on call. This was the According. to the 2010 U.S. (behind lndiana) at 5.1' percent, only one aimed at reducing the Census, the population of West While the nationwide decrease number of people in jail. Vhginia that year was about the is likely the result of budget con- One has to wonder as to why same as it was in 1960. straints, it's worth noting that the the incarceration rate is rising in From 1971 to 1997, West V-lr- United States has the highest doc- West Virginia while the crime ginia had the lowest Crime in the umented incarceration rate in the rate is not. According to Doug- nation, before settling for sec- world at 730 people per 100,000 las: "Criminal justice profes- ond lowest in 1998 with 2,547.2 of population. The U.S. Depart- sionals and policy makers are crimes committed per 100,000 ment of Justice puts the number at examining the state's sentenc- people. And it hasn't changed 500 per 100,000, but this includes ing practices as they analyze this much in the intervening years only those inmates sentenced to troubling increase in incarcera- -- in 2011 it was 2,589.8 per more than a year in federal or state tions." 100,000 people. Our prison penitentiaries. It does not include The West Virginia prison sys- population has, however grown regional or local jails -- the cost of tem is overcrowded. People 89 percent, from 3,535 inmates in which was the number one concern who should be in penitentiaries 1998 to 6,681 in 2010. raised by the Eastern Panhandie's are currently being held in re- According to Brad Douglas, county commissions diaring the gional jails. This creates addi- a research analyst with the West Legislative Summit I attended the tional problems for inmates and Virginia Department of Correc- at the Blue Ridge Community and puts stresses on the system. It tions "nearly 90 percent of West Technical College on Dec. 3. Ac- also results in higher costs that Virginia crimes are nonviolent." cording to the summary prepared are ultimately borne by taxpay- He notes that that number hasn't for the summit, the three counties ers. changed much since1961. Statis- of Morgan, Berkeley and Jefferson We have some important tics I've seen indicate the number spent nearly $5 million in regional choices to make. But here's of crimes peaked at around 2,900 jail costs in fiscal year 2011-2012. something to consider that I've per 100,000 in 2005-2006, but it At the summit, the county com- heard repeated on three different has subsequently declined. Inter- missions focused on raising reve- occasions -- at last year's Leg- estingly, murder and non-negli- nues to meet the rising cost of re- islative Summit, at this year's gent manslaughter are the least gional jails. The list of options in- summit and at the Legislative committed crimes in our state -- cluded: redirecting the state's por- Wrap-Up luncheon hosted by they peaked in 1975 at 7.4 per tion ofthe real estate transaction tax the Jefferson County Chamber 100,000 before declining by more to fund jails; ensuring that munici- of Commerce last May -- and than a 1/3 to 4.3 per 100,000 in palities pay their fair share (80 per- it's this: we should incarcerate 2011, cent of all crimes reported in West people who we are afraid of and So while the crime rate remains Virginia are in municipalities); in- not who we are mad at. Perpe- relatively stable, West Virginia's creasing defendant reimbursement trators of violent crimes and oth- incarceration rate has grown rap- fees and stepping up collection ef- er serious felonies are people to idly. According to the Pew Cen- forts; tapping into Marcellus shale be afraid of and should be in- ter on the States, the Mountain revenues; or raising taxes on beer carcerated to protect the public. State even bucked a nationwide and wine. However, regarding other types trend that started in 2009 when Oh, there was one more sugges- of crime, perhaps we should state prison populations began to tion -- to improve mechanisms consider controlling our temper decrease for the first time since to permit defendants to post bond and try another approach. LETTER TO THE EDITOR Charles Town City ms teen court was approved, This teen court is really not a ects and not earmarked for this Council members because they but not funded by the State, so how court program; it is just another lib- social program. How about using want to use our money to fund Council's pathetic important is it? See West Vn'ginia eral juvenile diversion program for the money to change out Charles another duplicate state social ding Code 49-5-13d. Special interests 11 to 18-year olds who have com- Town's old streetlight fixtures program? fun choices backed by certain liberaljudges and mitred crimes like vandalism and and replace them with energy- This program will not benefit lawyers badgered county govem- disorderly conduct. Most of the efficient fixtures that will reduce Charles Town residents. How- The left wing ofthe Chartes Town ments to fund their program. Now proceedings are run by teens, not electricity costs for taxpayers by ever, funding the projects I men- City Council is at it again. This time they have come begging to our city adults, and the maximum penalty up to 80 percent year after year? tioned above will greatly benefit it plans to use city revenue to help to get revenue for this program, for their crime is community ser- We don't have an animal shel- Charles Town taxpayers. The left fund a state-enacted bureaucracy which would be derived through vice. There are not any valid statis- ter in Charles Town and unfortu- wing of the City Council needs to called the teen court. It is disturbing increases in city traffic tickets. Ini- tics to show that we have a signifi- nately the City Council does not be held accountable for its atro- that certain council members want tially, the revenue is estimated to cant teen problem in Charles Town provide any funding 'to the Ani- cious spending habits even as it to fund a duplicate social program take $20,000 dollars a year from to warrant any funding for this pro- mal Welfare Society of Jefferson fails to address and manage real in these tight fiscal times and then Charles Town's coffers; year after gram.. Our current court system has County that takes care of our four- priorities. We are not required to eventually raise taxes on us. These year. These special interests actu- worked well for all city residents, legged friends. How about giving contribute one cent to this pro- are the same council members that ally want $60,000 per year of our young and old alike. $20,000 a year to the shelter for gram. Charles Town should not continually try to block business money. If they want this program, If City Council would like to in- them? Or we could fund proj- provide any revenue to it. growth that would provide much- shouldn't its users -- the parents crease costs for ffaffic ticket vio- ects like sidewalks, raises for city needed city revenue, such as the and their aberrant children -- fully lations, the revenue should be put staff, and so on, that are being ne- Dave Bames Tractor Supply and CVS projects, pay for it? in a general fund for other proj- glected by certain left-wing City Charles Town TOM MILLER N West Virginia politicians, both at the national and state levels, have rushed to presefit their middle-of-the-road vievgs on proposals to control the use of firearms in the wake of the tragic event in a Connecticut school that claimed the lives of 20 innocent young children as well a.s a half dozen adults,. Most of them appreciate the public opinion tightrope they must negotiate to keep the desired support of natiori- al groups that advocate the right to bear arms while at the same time appealing to those who desire much tighter gun control laws nationwide. U.S. Sen. Joe Manchin started the debate last week by saying he believes "everything should be on the table. We should be 'talking about everything." This non-definitive approach was designed to avoid upset- ting voters on either side of this issue and was echoed later by many national and state po- litical figures -- political rep- resentatives in Washington re- sponded with the most neutral comments possible while state lawmakers gladly passed the ball to the federal government. But Manchin still had to make it clear two days later to con- stituents who don't want any messing with the right to bear arms that he was merely sug- gesting the topic be discussed. Third District Congressman Nick Rahall adopted the age- old "some of my friends are for it and some of my friends are against it, and I stand with my friends." He said the "causes of violence in America are bigger and broader than just firearms (and) I want to hear from all sides before Congress moves forward, so we can move for- ward together." No wonder he's been re-elected routinely every two years for nearly four decades. Republican Congresswom- an Shelley Moore Capito was even less specific if that's pos- sible. She Said she was "deep- ly saddened by the heart- breaking events in Newtown ... There's no question (these) devastating shootings will ig- nite a debate." At the state level, Senate President Jeff Kessler, D-Mar- shall, said he would "not ex- pect the state to consider any kind of ban legislation (on guns). These kinds of things are better addressed at the fed- eral level, for uniformity:" Delegate Tim Armstead of Kanawha County, the lead- er of the Republican minori- ty in the House of Delegates, was equally reserved in his comments. He said legislators "need to step back ... it's too soon to say we are going to do this or that. After we step back, we can think thoughtful- ly about what policies need to be looked at." To his credit, Gov. Earl Ray Tomblin, came the closest to actually suggesting 'a course of action. After first mention- ing his credentials as an "out- doorsman," he said this state's laws 'that "give us the freedom ... to bear arms should not prevent us from putting rea- sonable restrictions on assault weapons ..." Clearly, leaders in West Vir- ginia don't intend to upset members of the National Rifle Association and other groups that strongly oppose any movement toward widespread gun control in this country.