West Virginia’s new business incentive fund comes with $30 million and no guardrails
West Virginia lawmakers say the state needs a deal-closing fund to compete with other states. But the program doesn’t specify how the money can — and can’t — be spent.
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A lot of other states were doing it. And the pressure got to West Virginia to follow suit.
Now, lawmakers have approved putting $30 million into a deal-closing fund meant to attract new businesses to the state, following Gov. Jim Justice’s recommendation during the recent special session. Dubbed the “seal the deal” fund, the money is meant to go to projects that will convince a company to come to West Virginia.
Economic Development Secretary Mitch Carmichael says this kind of fund is necessary for West Virginia to compete with its neighbors.
“In a post-pandemic world, we’re trying to recover from our worldwide economic slowdown, and other states have these tools,” Carmichael said. “Why would anyone want to tie the hands of West Virginia, and not allow us to compete for these jobs and opportunities?”
But these types of funds have drawn bipartisan criticism in other states for failing to get results, and past West Virginia incentive programs rarely produced the promised economic benefits. Plus, the Legislature approved the fund without putting guardrails on it — so while officials say rules are coming, there is currently no independent oversight governing how it’s spent and analyzing what jobs — if any — materialize.
If at first you don’t succeed….
Justice has tried for years to get the Legislature to appropriate money for a deal-closing fund; a few years ago, he proposed allocating $35 million to it, but lawmakers opted to exclude that item from the final budget.
“All of our contiguous states possess such funds, and we have long sought those funds,” said Carmichael, who was Senate president from 2017 to 2021. He lost his seat in the 2020 Republican primary election. “We tried to get these deals, but there was always a higher priority for public funds.”
But West Virginia’s budget surplus, largely attributed to the surge of funds the state has received through federal stimulus packages, changed the fund’s outlook. Justice called a special session in June to ask lawmakers to appropriate $250 million in surplus revenue to go to various initiatives. Voting on June 24, legislators from both parties overwhelmingly approved nearly all of Justice’s requests, including the $30 million deal-closing fund.
“It is for the purposes of filling that gap in a transaction to recruit a business that would otherwise not be here if not for this funding stream, whatever it might be,” Carmichael said. “It could be a water and sewer project to a particular site, it could be broadband development, it could be environmental cleanup, any of those issues that are impediments to a company locating and creating jobs in West Virginia.”
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