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Lawmakers Deny Northam’s Coal Tax Credit Sunset Recommendations

Man speaks into microphones
Gov. Ralph Northam speaks at a mass vaccination event in February. (Photo: Crixell Matthews/VPM News)

Lawmakers rejected amendments from the governor on two bills passed to sunset some coal employment tax credits largely targeting Southwest Virginia.

HB 1899 from Del. Sally Hudson (D-Charlottesville) and SB 1252 from Sen. Jeremy McPike (D-Manassas) would stop what Hudson calls a “leak” in Virginia’s tax code. She says the tax credits fall short of the intended job creation goals, and cost the state too much money for little impact. A 2020 report from the Joint Legislative Audit & Review Commission came to the same conclusion.

Gov. Ralph Northam’s proposed amendment would have redirected the money being spent on the credits to the University of Virginia in Wise for programs in data science, cybersecurity and renewable energy.

“I think that’s surely one worthy outlet for economic development investment in Southwest Virginia, but it’s one of many,” Hudson said.

Hudson said the bill was designed to not keep that money tied up to specific programs, but to return it to the general fund where lawmakers can appropriate as they see fit.

She followed that it also calls for the convening of a stakeholder group through the Department of Mines, Minerals and Energy to discuss an economic transition in the Southwest. The group would consider plans and funding needs for infrastructure, clean energy, and cleaning brownfields and coal-impacted land.

Sen. Bill Stanley (R-Martinsville) criticized the amendment when it came up in the Senate, saying it didn’t actually commit to sending the money to UVA Wise, and that it was an empty promise of aid to the Southwest.

“It’s an amendment that makes our Governor think, ‘there, I did something for Southwest Virginia,’” Stanley said.

Prior to the General Assembly’s reconvened session, boards of supervisors in Russell, Tazewell, Dickinson and Buchanan Counties either officially opposed or indicated their objection to the Governor’s amendment.

Tazewell County Board chair Tom Lester says he wasn’t a fan of the initial legislation, but has “come to terms” with a changing economy. He and other members of the Board praised the bill for requiring a stakeholder group to provide recommendations to the General Assembly on spending.

Lester says Northam’s amendment presumes where the money saved by eliminating the tax credits should go. He says UVA Wise should be getting funds, but that most college students from his county end up going somewhere closer, like Virginia Tech - “[UVA Wise] might as well be the University of Tennessee.”

A measure opposing the amendment was brought and seconded by two Democrats on the board. Lester, a Republican, supported it.

CORRECTION: An earlier version of this story misstated how the tax credits work.