ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, March 5, 1996 TAG: 9603050027
SECTION: EDITORIAL PAGE: A4 EDITION: METRO
VETOING the proposed doubling of a tax credit for coal companies with Virginia mines would put Gov. George Allen at odds with a lot of people. The bill has the backing of Democrats, Republicans, business leaders in the state's troubled Far Southwest, the United Mine Workers, coal-carrying Norfolk Southern and, of course, the coal companies.
But the bill deserves a veto. And however unlikely the prospect, given the overwhelming margins by which the measure sailed through the legislature, the veto deserves to be upheld.
For one thing, the bill reflects bad fiscal policy. The credits - estimated to cost the state $188 million over 12 years - are promised now, but wouldn't go into effect until the 1998-2000 biennium. This is akin to the backloaded expenditure that contributes to federal budget ills, and is nothing Virginia should emulate.
Unlike a similar (though smaller) credit adopted last year that failed to produce the hoped-for investments in deeper mining, the 1996 bill does not condition the credits on the state's having a sufficient surplus in the state budget. A future legislature, of course, could still repeal the credit. But outright repeal would be more difficult than exercising a sufficient-surplus clause, and would come at the cost of reneging on a promise to the coal companies.
Even more important, the bill reflects perverse economic-development policy. Job-creation incentives, whether for new employers or expansion by existing ones, should go for infrastructure improvements and worker training - investments that remain valuable whatever the fate of a specific business. They should not go for tax breaks and other subsidies that cannot be recouped if an employer creates no jobs or pulls up stakes.
And all this not to speed transition to a new economic base for the troubled coalfields. No, the tax subsidies aim to make an aging industry artificially competitive for a few more years. Even backers of the bill concede they're just trying to buy time.
Which is folly. Even this limited giveback doesn't have a bearing on - indeed is at odds with - the cause of jobs erosion in the coalfields. The main culprit isn't excessive taxation. It's desirable automation.
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