John Deskins, an economics professor at West Virginia University and director of the Bureau of Business and Economic Research, speaks to lawmakers on Jan. 10, 2024.
WV economic development: Morrisey takes different path from Justice's tax cuts, deals
Despite years of big business deals and tax cuts, expansive job growth hasn’t happened yet. And with a looming budget shortfall, Gov. Patrick Morrisey is putting less money into economic development.
Then-Gov. Jim Justice speaks, in April 2024, at an event at Nucor Steel's construction site in Apple Grove, Mason County. At right is Babydog.
Courtesy photo
After years of big promises and historic business deals, West Virginia’s job boom has yet to happen.
Over the past decade, state officials have bet hundreds of millions of dollars on cutting income taxes and attracting big companies, fueled by a flood of federal pandemic relief funds.
Former Gov. Jim Justice celebrated his administration’s economic investments in companies like Berkshire Hathaway, Nucor and Form Energy while praising the hundreds of jobs they are expected to bring.
“What’s happening right here and right now will benefit the state for decades and centuries to come,†he said during one of his final news conferences as governor late last year.
Over the past decade, West Virginia has ranked last in the nation for the number of jobs added, according to federal employment data analyzed by the state’s Chamber of Commerce.
“Under the surface, it doesn’t seem like the needle has moved very much,†said John Deskins, director of the West Virginia University Bureau of Business and Economic Research. “We certainly haven’t had any surge in job growth, not by any means.â€
John Deskins, an economics professor at West Virginia University and director of the Bureau of Business and Economic Research, speaks to lawmakers on Jan. 10, 2024.
WILL PRICE | WV Legislative Photography
Deskins said population loss is the biggest reason West Virginia hasn’t had major job growth over the past decade. The state still has one of the lowest workforce participation rates in the country, as people grow older or move to other states.
Now, with federal pandemic money running out and a projected budget shortfall looming next year, Gov. Patrick Morrisey is reverting to saving money.
He’s asking state agencies to do more with less while consolidating multiple departments, cutting back cash incentives and pushing for reforms he says will make West Virginia more attractive for businesses.
The governor is devoting resources to the industries that are most likely to come to West Virginia, Deskins said.
“He’s not casting such a broad net,†he said.
Between 2020 and 2022, West Virginia received more than $12 billion in federal funding through unemployment assistance, child care tax credits and Medicaid matching funds.
At the same time, state revenue soared, fueled by surging energy prices.
While the state budget was flush, Justice pushed through a 21% income tax cut in 2023, saying it was the largest income tax cut in the state’s history. The tax cut is expected to cost the state hundreds of millions in annual tax revenue and contains a trigger for more cuts.
The Justice administration also poured nearly $400 million into a deal with Nucor to bring a steel plant and 800 manufacturing jobs to Mason County. Form Energy, a battery manufacturer in Weirton, got another $290 million package.
Mitch Carmichael, former secretary of economic development, said projects began to take off as big companies announced construction plans during Justice’s second term.
“The second four years were very successful in creating blue-collar jobs and projects oriented toward the innovation arm of the economy,†he said.
The two largest manufacturing plants that received hundreds of millions of state dollars are expected to be in production and fully staffed within the next two years.
Less revenue and a lean budget
Now, the extra cushion is gone, and the state has less money to entice businesses.
He also championed legislation allowing universal licenses, creating a “one-stop shop†for permitting and increasing energy production to fuel data centers.
So far, Morrisey hasn’t announced any large-scale business ventures or blockbuster development deals, like Justice did with companies like Form Energy and Nucor.
At a news conference last month, Mettler Packaging executives stood near Morrisey as he announced a new initiative and a $400,000 investment in the sustainable packaging company.
As part of a $50 million “Grow West Virginia†campaign, the investment will allow the company to supply 50 new jobs and expand its Moorefield factory.
“In order for West Virginia to grow and reach our potential, we must create jobs and we have to drive economic development,†he said, “Right now, 50th is not acceptable and 50th in the workforce is not acceptable.â€
The governor plans to use a combination of excess state lottery funds, loan interest revenue and state appropriation funding.
“It’s meant to be very different than what we’ve done in the past," he said, "but the goal is still the same.â€
This report was originally published by Mountain State Spotlight. Get stories like this delivered to your inbox once a week by signing up for their free newsletter at mountainstatespotlight.org/newsletter.
