Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, March 16, 1991 TAG: 9103160200
SECTION: BUSINESS PAGE: A-8 EDITION: METRO
SOURCE: GEORGE KEGLEY/ BUSINESS EDITOR
DATELINE: NATURAL BRIDGE LENGTH: Medium
This is not a good year for Western Virginia's major industries - tourism, construction, financial institutions and manufacturers of heavy goods - said Mary Houska, a Hollins College economics professor.
Houska told the conference, an annual meeting convened by Rep. Jim Olin of Roanoke, she does not see recovery from the recession this year. That contradicts recent reports from Washington that suggest recovery as early as this summer.
Rather, Houska said businesses will continue having problems getting loans for the next six months because of banks' tight credit policies. College seniors, she said, face a poor job market and part-time workers, half the labor force, are not eligible for unemployment benefits.
Sam Laposata, an economist for Virginia Power, said Western Virginia's economy is "moderating but I don't think it will go down like Northern Virginia." The region did not have as much upswing as the Washington suburbs, he said.
Laposata predicted the recession will end later this year but recovery will be "sluggish." Interest rates will be high, he said, because more money "will be sucked" from the U.S. for the rebuilding of Eastern Europe.
Roanoke Valley's economy "is holding steady . . . The numbers don't go up or down rapidly. [It] is not a boom-or-bust economy," said Sheila Trunzo, director of the Blue Ridge Small Business Development Center. In one of four regional reports, she said that if all plans come to fruition, approximately $200 million worth of construction projects soon will be in progress in downtown Roanoke.
Robert D. Reischauer, director of the Congressional Budget Office, told the meeting that the federal budget deficit will reach a record $309 billion this year but it will come down rapidly after 1992 because of a reduction agreement reached by Congress last year.
The federal bailout of troubled savings and loans will have only a temporary effect on the recession because proceeds from their sale will more than offset the amount of federal money spent to save the institutions, Reischauer said.
Olin said Western Virginia has not suffered as much from recession as other areas "in very unsettled times." He sees "opportunity, perhaps larger than ever" in supplying goods for the emerging democratic countries of Europe.
However, Cabell Brand, a Salem business leader who has headed many of the region's anti-poverty programs, asked where the money will come from to help poor people and to rebuild roads and other infrastructure. This recession is different, he said, because government also lacks money for programs to keep the economy moving. "Resource development has got to be addressed," Brand said.
"We are certainly strong enough as a nation to afford that," Olin replied. If taxes are increased, the congressman asked, how much should come from the private sector.
Elmer Hodge, Roanoke County administrator, asked if federal aid for economic development will be automatically extended "or will we have to ask for it?"
In a sharp reply, Olin said he didn't particularly like Hodge's question. "If the county needs to do something, I don't know of any county with more capabilities." Roanoke County residents are "accumulating capital," he added.
In a reference to localities' expectations for federal funds, Olin said, sending money to Washington and trying to get it back is a losing proposition - "you won't get it back."
The Bush administration is "trying to push things out of the federal government but that won't work unless somebody is there to pick it up," Olin said. "We need stronger involvement by cities and towns. We need a consensus on what needs to be done and who will do it."
After winning the Persian Gulf War, Olin said, the nation can solve other problems "if we spend more time focusing on what needs to be done instead of beating each other up."
Umbrella programs to help the poor have disappeared, jobs available for people with limited education are not as plentiful and the people with lowest incomes have less money after taxes, Houska said. "We must make a renewed commitment to education, particularly in Southwest Virginia . . . We'll not be able to attract industry when high school graduates haven't the foggiest idea about numbers or how to write a sentence."
by CNB