Opinion

New tax credit should also be for small business

An editorial from The Exponent Telegram

CLARKSBURG, W.Va. — Everyone knew going into this legislative session that the state had some monumental challenges in terms of balancing the FY2015 budget. Declining gambling revenues as well as declining coal severance tax revenues, combined with higher Medicaid costs from the federal government, created a $200-plus million budget shortfall.

The challenge was made even more difficult when Gov. Tomblin proposed a well-deserved 2 percent pay increase for teachers and a $582 across-the-board pay increase for state employees.

To balance the budget, the governor proposed to tap into the rainy day account to the tune of $85 million. However, the Legislature has several options on the table to balance the budget that could tap into the rainy day fund to the tune of $150 million. That is all being ironed out as we speak.

Considering the budget cuts that state agencies have had to absorb each of the past two years, and how difficult it has been and will be to get new funding for practically any project, you can imagine the surprise when at the 11th hour The Greenbrier Resort and its billionaire owner struck a deal worth up to $25 million in tax breaks over 10 years for a new medical institute.

Owner Jim Justice says the resort-style medical facility is one component of about $400 million in tourism projects he has in the works. The investments are expected to create more than 1,000 new jobs. Justice said project unveilings will happen next week.

Sen. Clark Barnes, R-Randolph, argued that the facility was already in the works — tax break or not.

Barnes added that the state shouldn’t be focusing on breaks for a businessman worth $1.6 billion, who ranks 362nd on Forbes magazine’s list of the country’s wealthiest people. Justice made his fortune in coal and agriculture.

“We’ve struggled on the minimum wage issue to give our lowest wage-earners a few cents on the dollar,” said Barnes, who voted against the final version of a minimum wage bill this session but supported a more modest increase. “And then we turn around and give one of West Virginia’s wealthiest citizens a huge, multimillion-dollar tax break.”

Justice bought The Greenbrier out of bankruptcy in 2009 for $20.1 million.

Only a handful of people, including statehouse leaders, know the other projects Justice is planning, said Senate President Jeff Kessler, D-Marshall. But Kessler pointed out that Justice has consistently poured money into the West Virginia economy.

Therefore, a proposal was made to a handful of elected leaders, who we are supposed to trust, that they made the best deal in the interest of West Virginia. It is understandable that many times economic development projects have to be kept under wraps due to the possibility of losing the project if investors are scared off because of any negative publicity or competitive pressures that can occur once the cat is let out of the bag.

Jim Justice has proven time and again that he will invest in West Virginia and create new tax revenues, and most importantly, new jobs in the process. Many would call this a sure bet.

Lawmakers inserted the break on corporate income tax, which specifically meets The Greenbrier’s needs. The break would apply to investments of $80 million or more at historic hotels that primarily serve out-of-state or international clientele. The credit is worth 25 percent of the total investment, at a maximum of $2.5 million a year for 10 years.

On the other hand, the tax credit equates into about $20,000 per year per new job created up to 125 jobs.

That begs the question: What legitimate local business wouldn’t jump at the opportunity to add staff and make investments in the state if they received a state tax credit of $20,000 for each new job created, guaranteed for 10 years…

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