Supporters of Coal Point to Regional Investments

LEBANON, Va. – It was a time when Appalachia, burdened with some of the highest unemployment and poverty rates in the nation, decided to help itself. Twenty years later, government leaders say the Virginia Coalfield Economic Development Authority works.

“You can always say the state should do more for us, the federal government can do more for us, but we have to do things for ourselves,” said Ford Quillen, who as a delegate in 1988 introduced the state legislation that created the development authority.

The goal was to form a regional agency that could use coal and gas severance taxes to diversify the economy in a region almost solely dependent on coal. Because one day, community leaders realized, the coal would run out.

“We raised the severance tax and put it into economic development ourselves,” Quillen said. “I’m just so proud of what this authority does because I think it sends out a signal from Southwest Virginia to other places that we’re going to be counted and we’re going to help ourselves, and you should come in and help us too.”

Jonathan Belcher, VCEDA’s executive director, said in its 20 years the authority has helped to create 12,000 jobs and draw $2 billion in private investment to the region. Over those two decades the authority has approved $117 million in funding for 208 projects. And thousands of those new jobs, Belcher said, are in industries other than coal – more than offsetting the job losses in the industry during that period.

Coal production in the region is taxed at 2 percent – with one-eighth of the revenue going to VCEDA. Over the past 20 years, that’s meant $93 million in severance tax revenue has flowed through the authority, and some of that has been leveraged to provide even more funding.

“One of the things about raising a coal severance tax that really amazed me is that the coal industry didn’t basically object to it,” Quillen said. “I think their position was, if you all would use this money wisely, we don’t mind helping out.”

Diversification

As it enters its third decade, VCEDA’s latest campaign is aggressively marketing the coalfields as “Virginia’s e-region,” with millions of dollars dedicated to deploying broadband Internet technology across the region’s seven counties.

“Just about every industry now has to have high-speed fiber-optic broadband,” Belcher said. “That is a key competitive advantage for the region.”

The authority’s focus is on high-tech jobs alongside the energy jobs, “both traditional energy jobs and the advanced energy jobs of the 21st century,” Belcher said. In other words, he said, the region welcomes green jobs with open arms.

Alpha Natural Resources CEO Michael Quillen, who was VCEDA’s first chairman, said the authority had “a pretty rocky start.”

The idea wasn’t well-received by elected officials who didn’t like the thought of a regional authority deciding how money would be distributed among seven counties, three of which produce most of the severance tax revenue, said Michael Quillen said, who is a second cousin to Ford Quillen.

“One of the smartest things that the legislators did when they created VCEDA was put representatives that are not elected officials on that board,” Michael Quillen said. “Elected officials are expected to do certain things on a regular cycle, and when you have money and you’re an elected official, you like to spend it.”
Still, there are critics of how the money is spent by VCEDA, which has a board of directors populated by several coal industry representatives.

Kathy Selvage, vice-president of Southern Appalachian Mountain Stewards, a nonprofit group based in Big Stone Gap, Va., said VCEDA’s work is not truly diversifying the region’s economy; instead, she argues, it is building up the region’s dependence on coal.

“Severance money should not be used to promote coal, and that’s what they’re doing with building a power plant; they’re not promoting diversification,” Selvage said. “When you’re creating a bigger demand for coal, that’s not diversifying your economy.”

Steve Fisher, a retired professor who lives in Emory, Va., and has taught and written extensively about the region, said VCEDA should be encouraging a model different from traditional economic development. He said severance tax revenue should be used to address the overall needs of the community and develop a locally based, sustainable economy.

The projects

The $1.8 billion coal-fired power plant under construction in Wise County is touted as a crowning achievement of VCEDA’s work.

The authority also notes major successes in developing two industrial parks on reclaimed surface mine sites; the arrival of high-tech companies Northrop Grumman and CGI in Lebanon; the development of Grundy’s new downtown; and the Coalfield Expressway, which will provide east-west highway access across Virginia’s coal counties.

The Wise County Industrial Development Authority plans to break ground this summer on an energy research center at the Lonesome Pine Regional Business and Technology Park, which also contains two call centers. And at the Southern Gap business and technology park, a 3,000-acre site on a flattened mountaintop in Buchanan County, the first business tenant has announced plans to provide 400 jobs at a call center.

“By working with the coal industry and working with the county and [Virginia] Department of Mines, Minerals and Energy, we were able to take a mountaintop removal coal project and put it back into productive use as an economic development project,” Belcher said. “They went from that county probably having the least-developable property all over the state to having maybe the most property.”

Belcher said VCEDA has “allowed a tremendous amount of economic development to happen in the area that would not have happened otherwise.”

“If you look around the region at pretty much any of the major economic development projects that have occurred over the past 20 years there has been some VCEDA funding or some role that VCEDA has played,” he said.

What’s next

VCEDA still has much work to do, Belcher said, and it likely will be another 20 years or more before the per capita income in the coalfields approaches the state
average.

“Our per capita income has more than doubled since VCEDA was created, but it’s still half the state rate,” Belcher said. “There’s been progress made, but there’s still more progress to be made. …  I think in 20 years we need to be talking about advances we have made in raising the quality of life.”

In 1988, the average weekly wage in the coalfields region was about $360 a week, said Linwood Holton, a former governor who serves as a member of VCEDA’s executive advisory board. Today, Holton said, that wage is about $680 a week.

Holton was one of two former governors at the annual meeting June 23 who weighed in on the direction the authority should take in the future. Citing higher wages and employment now versus 20 years ago, Holton said VCEDA has made “a magnificent contribution to the employment of this area.”

He also pointed to the correlation between the improvements and the development of higher education. And, he stressed the importance of that link if the region is to continue to develop a skilled, trained work force – for existing industries and those to come.

The other former governor at the meeting was Gerald Baliles, who in 1988 signed the legislation creating VCEDA. Baliles called for relevant education and sustained funding for infrastructure.

“If we continue to believe in the power of economic growth and vitality, that the power of economic growth is the greatest social program that a society can devise because it provides jobs for workers … opportunities for communities and revenues for state and local governments, then there’s a lot of work to be done,” Baliles
said.

“Do not suppose your task over the next 20 years will be easy; do not hope that your decisions will be simple. ... We are in a pool filled with alligators.”

One of the alligators discussed at the meeting is the federal legislation limiting carbon dioxide emissions; another is the effort to stop to certain types of mining.

“The cap and trade and climate change issue is vindication for why this group is here,” said Tommy Hudson, president of the Virginia Coal Association and vice-chairman of VCEDA’s executive advisory board.

“We all knew coal would be here for a finite time and we’d have to have the industries to replace it,” Hudson said. “Coal might be here for less time because of climate change, and that makes our work and the work of VCEDA more important.”

Michael Quillen said with legislation introduced in Congress to eliminate the use of valley fills – the dumping of surface mining waste into valleys – Virginia could lose a third of its coal production.

But VCEDA officials are hopeful that, whatever happens, their economic development programs will benefit the region for decades to come.

“You make such a tremendous difference here,” Ford Quillen said. “There’s no more moral or better thing to do than to provide jobs for your people.”

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