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Old Problems and Continuitiesand Uncertainties. Most of the distinguishing characteristics of West Virginiain the 1980sand 1990swerepart of trendsand patternsthat had been in evidence at least since the middle of the twentieth century. The population decline, which gathered momentum during the economic dislocations of the 1950s, was temporarily reversed during the 1970sbut resumed in the 1980s. Between 1980 and 1990the number of people in the state dropped from 1,949,644to 1,793,477,alossof eight percent, which costthe stateone of its four congressional seats. Closely related to the decrease in population was the prolonged economic malaise, which afflicted the state for more than a quarter of a century. The economictroubles, populationlosses, and almostinevitablefinancialdistresses of the state and local governments gave rise to myriads of other problems that seemed to defy solution and contributed to a diminution of confidence in government and public officials. Governor Arch Atfred Moore, Jr. When Governor Moore began his third term in January 1985,the economic conditionsin West Virginia were reaching a critical state. The unemployment rate stood at fifteen percent, the highest in the nation. The coal industry, historically a mainstay of the state's economy, was sinking at an alarming rate. Moore immediately initiated a program of recovery, which centered around the revitalization of the coal industry and the attraction of new industries to the state. To improve the competitive position of West Virginia coal in national and world markets, he took steps designed to cut its productioncosts by two dollars on the ton. A thirty percent reduction in coal company contributions to the Workers' CompensationFund, which took effect on July 1, 1985,resulted in savings to the industry of about $180million during the ensuing five years. In addition, Moore and the legislature addressed the mounting criticisms of the state's Business and Occupations Tax, which, its opponents claimed, discouraged businesses and industries of all kinds from entering West Virginia and impelled many of those already in the state to leave. Effective in 1987,the tax was repealed on all businesses except utilities. Old Problems and New Dilemmas 289 In pursuit of the goal of drawing new industriesto West Virginia, Moore and the legislature made a special effort to lure a multibillion-dollar Saturn automobile plant that General Motors was planning to build. Well aware that competition for the plant, with its thousands of jobs and other economic benefits, would be extremely keen, the governor and the legislature turned to the idea of a substantialtax incentiveto GeneralMotorsif the companylocated the plant in West Virginia. Such incentives were time-honored methods of attracting business and industry and had been used extensively by federal, state, and local governments. In 1985 the legislature passed for that specific purpose the Business Investment and Jobs Expansion Act, which Governor Moore promptly signed into law. The act, nevertheless, failed to win for West Virginia the much-desired Saturn plant. The decisionto locatethe Saturnfacilityin Tennesseegalvanizedthe West Virginia government into making even greater efforts to expand business investments andjob opportunitiesin the state. In 1986the legislaturemodified the 1985 law to extend super tax credits, as the tax advantage was commonly known, to businesses already in the state, provided they expandedjob opportunities and modernized their facilities. By 1990 two hundred corporations, including manufacturing, retail, and service companies, were receiving super tax credits. They were awarded $6 million, or ten percent of the total credits, and created about nine thousand new jobs. Thechief beneficiariesof the supertax credits, however, proved to be coal corporations, which garnered about ninety percent of the total. Unfortunately, the credits to coalcompaniesyielded no immediatebenefitsto the state. In fact, in their long-range effect, they may have actually compounded the very problems they were supposed to alleviate. A study of the super tax credits in 1990revealedthat the numberofjobs in coal mining had fallenby 1,300in spite of an increase of 13.3 percent in coal production. The adverse effects of the super tax credits on state revenues and on the general economy led in 1990to legislationto prevent coal companies from using the super tax credits to avoid payment of severance taxes. On the other hand, coal companies that could demonstrate an investment of $10 million under the super tax credit program were allowed to apply for new credits in the future. In that same year Alan Mierke, deputy tax commissioner of the state, predicted that tax write-offs, which then amounted to $48millionannually, would increaseto $70millionby the mid-1990s. More disturbing was the failure to reveal the amountsof credits received by various...

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