CHARLESTON, W.Va. — Two advocates for more efficient government spending in West Virginia say tax credits for economic development projects should be viewed the same way as direct spending in the budget because such credits eliminate revenues that could have otherwise been collected.

“There’s nothing wrong with them (tax credits) if they’re used properly,” said Bill Maloney, a former Republican gubernatorial candidate who is now president of the Center for a Brighter Future.  “The big problem we have in West Virginia is the transparency issue.  You really have no idea what the benefits of these things are.”

Ted Boettner, executive director of the West Virginia Center on Budget and Policy, agreed.

“Oftentimes, these subsidies to businesses are rarely analyzed and monitored,” he said.  “They often go to companies that would have built here anyway and they also divert money from public goods and services.  They have a whole host of hidden costs, especially when they’re not paying good paying wages.”

Both Boettner and Maloney, who were guests on Friday’s MetroNews “Talkline” worked together on an opinion piece that was published in Friday’s The Charleston Gazette.

Keith Burdette, secretary of the state Department of Commerce, defended tax credits.  “I think it would be foolhardy for West Virginia to unilaterally disarm,” Burdette said.  “We compete against states that offer targeted tax credits every day and every single state in the United States offers them.”

In that op-ed, Boettner and Maloney said the following: “Every dollar that was spent in tax credits is money that could have been invested in our children, infrastructure or to lower everyone’s taxes, not just for those rich enough to hire the most well connected lobbyists.”

The piece continued, “For most of these businesses, it (subsidies) is just a way to get free money.”

Maloney argued such credits are often not an option for small businesses.  “Small business is where it’s (development’s) at in West Virginia.  They create more jobs than any other place we have, yet they never get the breaks that the big companies that come in, and get these special deals, do,” said Maloney.

Boettner said the state budget is fully examined each year.  “We go line item by line item, as you know, through that budget.  There’s conferees.  There’s lots of discussion, but when it comes to this other form of back door spending, we barely look at it,” he said.

The two have suggested, among other things, conducting a thorough review of tax expenditures, giving a state agency responsibility over reviewing the effectiveness of tax credits and grants, publishing all recipients of economic development subsidies and implementing sunset provisions and caps on tax credits.

Earlier this year, Governor Earl Ray Tomblin signed into law $25 million in tax credits for The Greenbrier Resort.

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Comments

  • Henry2145

    While I've never considered myself a Maloney fan, I agree with Mr. Maloney and Mr. Boettner. Too many tax subsidies without clear return on investment by the state is just corporate welfare. I bet we spend more money on tax subsidies to businesses than we do on food stamps and foster care. How is that conservative fiscal policy? Especially when we have no idea about the state's return. Are regular West Virginians really going to benefit from 25 million in tax breaks given to the richest man in the state so a NFL team from 1,200 miles away can have a few practices here? I think the Saints coming to the Greenbrier is great, but why should the state pay for it? If it's such a great business investment, wouldn't Mr. Justice be more than willing to put up his own money to get the Saints summer practices and then solely benefit from the return on his own investment? Heck, if the Steelers we're coming I'd be more excited.

  • Mason County Contrarian

    Tax credits are no more than state-subsidized business welfare, cloaked in the promise of "jobs". If this is what we need to do to attract "economic development", we're already deeper in the hole than most states who can afford to throw a million here or a million there.

    Most of us can't afford to drive to The Greenbrier Millionaire Playground, let alone stay there. Yet Joe Sixpack provides the tax support to keep it open.

    We can't this one on the federal government. Our state government in action, folks.

    • Mason County Contrarian

      Inadvertently left out the word "blame" from sentence regarding federal government.

  • Aaron

    While I very seldom agree with Ted Boettner or the Center for Budget and Policy which despite claims is anything by partisan or unbiased, I do agree with this opinion piece.

    I believe that not only the state but local governments should issue tax credits judiciously with clear terms of what is expected from the potential employer but the ramifications of what will happen should they not follow through,.

  • bulldog95

    Only in the world of government does it look at money it "could have collected" as money that is "missing."

    It isnt the governments to begin with. Its like Obama blowing up the deficit and since its coming down saying he cut the deficit. Forget giving tax credits to business, give all of us a tax break. I can spend my money better than the government can spend my money.

    • ole sasquatch

      The bulldog has figured it out. All that stuff about govt. doing this and that is nothing more than a ploy to win elections. Democrats surely you have to be starting to wake up. The reason Republicans continue to build momentum in WV is because we have awoken. We use to be dems. But Hey! We are not stupid the picture becomes clearer every day. There's got to be some common sense vs. a party who promises the kitchen sink, just to win elections.

    • BR

      Wrong bulldog - that money is for services and even in some cases "goods" that YOU use everyday!!
      So...... that money is the "peoples" money as determined by our federal and state constitution.
      The day you (and/or family members) NEVER need roads, police and fire protection, public schools, libraries, sporting teams and venues, EMT services, etc., etc., - then you can complain.
      Am I defending over-taxation and whether we actually receive a good deal on said services - in a word, NO.
      But STATE money is going to multi-million and multi-billion dollar companies for the FUTURE promise of something. I agree many that MOST of the time it is a bait-n-switch that these companies use to line their own pockets!!! Tell a beginning cop or teacher that still may qualify for food stamps in WV, that a cracker plant CEO or Jimmie Justice needs your %1 or %2 percent raise so they can buy a bigger jet to entertain potential clients!

      • Silas Lynch

        No, you're wrong BR

        That's the most ridiculous nonsense I've ever heard. Even more ridiculous is the majority of the country is starting believe and prescribe to that philosophy. The governments (fed. State and local) need to adopt an "old fashion" business philosophy when expecting to collect tax revenues--- they need to "Earn it"--

        You want me to build my billion dollar factory in Man, West Virginia then you had better already have or are willing to place the infrastructure I need,,, or I'll build it in Russia or some place and sell my goods to China.

      • Mason County Contrarian

        Nicely said, BR. I could not agree more.