Without fail, when the West Virginia Governor delivers his annual address to the Legislature and the state, he will include this line: “The state of our state is strong.”
Governor Tomblin included the line early on in his speech Wednesday night. This year, as with most years, it’s a debatable point, depending on the prism through which the state is viewed.
Let’s begin with the state government, and on that front there are some positives.
West Virginia is paying its bills on time, not laying anyone off, making regular payments into employee retirement programs, maintaining a healthy reserve account of over $900 million (although the Governor has proposed taking $84 million from that to pay higher Medicaid costs), enjoying high bond ratings, and even carving out a small raise for teachers and public employees.
Over the last few years the state has lowered its corporate net income tax, eliminated the tax on food and is one year away from eliminating the business franchise tax. There’s been no general tax increase since 1996.
So the fiscal condition of West Virginia government, especially compared with many other states and the federal government, is pretty sound.
But, thankfully, there is more to West Virginia than government, although it is, by far, the largest employer in the state. What is the state of the private sector economy? This is a wildly mixed bag.
Some parts of West Virginia are doing well–the I-79 corridor in north central West Virginia and the eastern panhandle, for example–but the southern coal fields are struggling and dotted with pockets of deep poverty and limited, even non-existent, opportunities.
The state’s biggest industry, coal, is in a slump and faces an uncertain future because of regulatory pressure from the EPA, competition from natural gas and the high cost of getting to smaller and hard-to-reach seams. Coal exports are down along with coal field employment, not only in the mines, but in related industries.
As I mentioned previously in this column, the state’s population is stagnant. State’s with strong economies have population growth as young workers stay home and out-of-state workers move in to take better jobs. That’s not happening in West Virginia.
Still, state figures show payroll employment has reached a new peak (775,000) and is growing. Additionally, employment is expected to gradually increase over the next three years, according to IHS Economics. However, wages over the last several years have largely flatlined, in part because of the decline in the coal industry.
And on it goes.
Ultimately, the state of the state is… complex, and at times, even contradictory, but that’s a lousy line for a speech.