Time to End Corporate Welfare for King Coal in Virginia

Posted by Nathan Jenkins | December 12, 2012 at 8:00 pm


Expenditures on the coal industry dramatically outweigh benefits to the economy of Virginia, according to a new report by Downstream Strategies. Click to enlarge.

Virginia taxpayers have been boosting profits for the coal industry with tens of millions of dollars in tax breaks every year. That’s not big news – but what’s astounding is that, due to the structure of the subsidies, the Commonwealth is not only foregoing revenue, it is actually paying cash to the industry.

According to a report released today from the research firm, Downstream Strategies, the coal industry in Virginia got $37 million in subsidies in 2009. Factoring in the subsidies as well as all costs and revenues directly and indirectly tied to the industry, the report shows that the net cost to Virginia that year was $22 million dollars. Read the press release and fact sheet here.

And what are Virginians getting for that? Not much.

The two largest subsidies were established over a decade ago in hopes of increasing Virginia coal jobs and production. Despite this preferential treatment, the Virginia coal industry has continued its sharp and steady decline, due largely to diminishing reserves and competition from lower cost fuels. Coal jobs and production are less than 50% of what they were in 1990. In fact, a 2011 report by Virginia’s Joint Legislative Audit and Review Commission found that the subsidies not only failed to increase jobs or coal production, but both actually declined at similar or faster rates than were predicted without the tax breaks.

This money should be redirected to the woefully underfunded programs that are working to bring non-coal jobs to an area that desperately needs them.

Unfortunately, in the face of mounting evidence against these handouts, the Virginia General Assembly this year extended a major tax cut for the industry and failed to put an expiration date on another.

These subsidies are padding the pockets of industry shareholders while Virginia’s coal jobs and mountains continue to disappear. While the profits extracted from Virginia’s mountains are exported far and wide, the coal miners who make them possible are left without job security or any serious investment in their region’s future.

As recommended by Downstream Strategies, Virginia should end this corporate welfare and shift much needed resources to bolster efforts in Southwest Virginia to diversify the economy, including developing programs such as early childhood development, education, infrastructure development and workforce training to secure the region’s future for the long-term.

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