Accountable USA - West Virginia

West Virginia’s resource-dependent economy and modest tax base preclude giveaways of the magnitude seen in neighboring states. A notable exception came in 2003, when state and local officials struck a nearly $150 million deal with the sporting goods retailer Cabela’s for a distribution center and megastore (see below). In 2007, the state provided more than $15 million and the city of Charleston offered local tax breaks to Charleston Stamping and Manufacturing to help finance the modernization of a plant that has since had difficulty finding customers (see below).

One of West Virginia’s major subsidies is the Economic Opportunity Tax Credit, provided to new and expanding businesses. Credits can offset up to 80 percent of various corporate tax liabilities. Other tax-based subsidies include the Manufacturing Investment Tax Credit and the Strategic R&D Tax Credit. Qualified companies can also access the Governor’s Guaranteed Workforce Training Fund, a customized training program. 

Transparency and accountability advocates from the West Virginia Center on Budget and Policy have argued for greater disclosure to improve the accountability of state tax dollars used for economic development.  West Virginia does not currently provide online disclosure of recipient name, cost, or outcome data for four of the five major subsidy programs we examined.  Information on the Governor’s Guaranteed Workforce Training Fund is disclosed in an annual report available here.

Key Subsidy Programs

Subsidy Program Recent Annual
Cost
Online Recipient
Disclosure
Recipient Disclosure
Score
Job-Creation/
Job-Quality Score**
Monitoring/
Enforcement Score***

Economic Opportunity Tax Credit

corporate income tax and other credits for job creation and investment

$4.9 million (FY2009)
0/100
100/100
75/100

Film Industry Investment Act

corporate income tax and other credits based on film production expenditures

$10 million (FY2009)
0/100
18/100
44/100

Governor’s Guaranteed Work Force Program

awards up to $2,000 per employee for customized workforce training

$3.2 million (FY2012)
28/100
28/100
47/100

Manufacturing Investment Tax Credit

corporate income tax and other credits for industrial investments

$4.3 million (FY2009)
0/100
20/100
35/100

Strategic R&D Tax Credit

corporate income tax and other credits based on qualified research and development expenditures

$1.6 million (FY2009)
0/100
20/100
35/100

* The score is derived from the Good Jobs First report Show Us the Subsidized Jobs (January 2014).

** The score is derived from the Good Jobs First report Money for Something (December 2011).

*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).

Major Subsidy Deals

Cabela’s (2003)

In 2003, the Cabela’s outdoors sporting goods chain won close to $150 million in public subsidies – and its own exit off of Route I-70 near Wheeling – for a 1.1 million square-foot distribution center and a 175,000 square-foot retail store, together projected to create 1,190 permanent jobs. With elaborate wildlife dioramas and other exhibits for the hunting and fishing set, the store was expected to attract 4-5 million visitors a year. West Virginia’s development authority provided a $35 million grant, and the county kicked in $6.5 million for land acquisition and site improvements. Ohio County created the Fort Henry Economic Opportunity Development District to enable the sale of tax increment financing (TIF) bonds, backed by the sales tax generated by Cabela’s and other businesses expected to be attracted to the 300-acre site.

The county oversaw the construction and furnishing of Phase I of the distribution center, which Cabela’s leased for 30 years for $1 million annual rent with an option to purchase for $1 at the end of the term. The county also oversaw construction of the store – with a TV studio, archery range and the state’s collection of stuffed whitetail deer – and immediately sold it to Cabela’s for $1. Cabela’s was exempted from personal property taxes on equipment and furnishings, and given the county’s nominal ownership of the distribution center, the company pays no real estate taxes on it. The retail store opened in 2004; by the following year, the store and distribution center employed a total of about 750 people and expansion of the distribution center was underway. By 2010, the Fort Henry TIF district, renamed The Highlands, had more than two dozen businesses, including restaurants, a movie theater and several other big box stores. (Key sources)

Charleston Stamping and Manufacturing (2007)

A large stamping plant in South Charleston built in the 1920s was having difficulty finding a new tenant after its longtime occupant, Union Stamping and Assembly, went out of business in 2006. The owner of the huge facility, financer Ray Park, purchased Union Stamping’s equipment in bankruptcy court and formed a new company called Charleston Stamping and Manufacturing. In 2007 the state government agreed to help the firm get off the ground. The West Virginia Economic Development Authority committed $15 million in public money to purchase automated equipment for the plant and lease it to the company.

This allowed Charleston Stamping, which committed to investing $20 million of its own, to reduce its capital costs and avoid paying personal property tax on the equipment. In addition, the state agreed to provide unspecified amounts in tax credits and training assistance, while the city of Charleston offered a two-year, 50-percent break on the city’s business and occupation tax. The hope was that the modernized plant would eventually create more than 500 jobs. The new equipment was installed and the plant was renovated, but it has remained idle as contracts failed to materialize. (Key sources)

Walmart in West Virginia

  • At least 4 Wal-Mart locations have received subsidies worth about $9.7 million in West Virginia.
  • We found no instances of property tax assessment challenges by Wal-Mart in West Virginia, but given the absence of centralized data, it is still possible that appeals have occurred.
  • Wal-Mart was found to have more workers than any other employer in the state relying on publicly-funded health insurance. This shows how taxpayers end up subsidizing Wal-Mart’s policy of providing low wages and inadequate benefits.

For more information, see the West Virginia page of Wal-Mart Subsidy Watch.