CHARLESTON — The West Virginia Legislature on Tuesday cautiously put the bow on a legislative package to seal the deal on a business development for Gov. Jim Justice and Economic Development Secretary Mitch Carmichael.
Most of the work Tuesday happened in the House of Delegates, where one delegate said lawmakers had been pushed to pass the package in a rush so Justice could put on a “dog and pony show” during his State of the State address Wednesday.
Delegates were more measured in their consideration of the six-bill package than the Senate during the two-day special session and ultimately accepted the package.
The new laws set up a deal that would see a steel recycling facility set up in Mason County, House Speaker Roger Hanshaw, R-Clay, said Monday.
The deal also includes an incentive for the company to invest in developing a facility in the Northern Panhandle.
“West Virginia has been working at this for years,” Hanshaw said. “We’ve been working our way into big-league economic development for years. We created the (Department of Economic Development Closing Fund) specifically for this purpose, and this bill funds it to the tune of what’s necessary to recruit what will be the biggest economic investment in the state’s history. I’m excited about it.”
The Senate finished its work on the bills package Monday and briefly convened Tuesday to accept the House’s actions on the bills. Both chambers adjourned from the two-day special legislative session less than 24 hours before the 2022 regular legislative session was scheduled to begin.
Overall, the majority of lawmakers said they supported the deal with the hope for a development they expect to create 800 jobs and spur up to $25 billion in economic activity in the next 10 years, according to an analysis by the West Virginia University Bureau of Business and Economic Research.
Lawmakers held their hope with caution about the governor’s convening the Legislature two days before the session to make the deal happen.
Delegate Todd Longanacre, R-Greenbrier, wasn’t a fan of having to consider such big financial transactions in a short amount of time, especially considering he felt like it all was meant to give Justice’s State of the State address a little oomph Wednesday.
“I’ll tell you what the rush is,” Longanacre said. “There’s a State of the State address coming up (Wednesday) night, and there’s a dog and pony show planned. That’s the rush, but my constituents have the right to hear these deals play out in the proper committees.”
Lawmakers likewise were concerned the State of West Virginia, flush with $1.35 billion from the American Rescue Plan, would be susceptible to bad deals after a history of getting taken in with deals that either went bad or never came to fruition, including an announced $80 billion natural gas investment deal with China in 2017 and 2018, negotiated by former President Donald Trump.
“This is a huge, huge deal for our state, the largest we’ve ever had,” said Delegate Lisa Zukoff, D-Marshall. “I’m a little concerned about the hyperbole that we hear from the (Economic) Development Office … Hyperbole scares people because we’ve all heard these deals that have never come to fruition before.”
Senate Majority Whip Ryan Weld, R-Brooke, wasn’t concerned about the stability of the deal, saying the company in question has a proven track record.
“It’s a publicly traded company that I really think has a history — when they have promised, they have delivered,” Weld said. “In the legislation we passed, there’s certain benchmarks that they will have to live up to in order for the state to come through with what is in that legislation. So over the next months and years I’ll look forward to those benchmarks being hit, showing everybody that this is a real opportunity.”
The legislation complies with the terms of a potential $315 million investment by the state that lawmakers estimate will bring in $480 million in tax revenue annually.
That investment is part of a deal with the company that is anticipated to invest almost $3 billion for a steel recycling facility in Mason County and potentially another supporting facility in the Northern Panhandle.
They also passed a law that clarifies how a company can be eligible for a minimum of $1 billion’s worth of tax exemptions if it meets certain financial investment and job creation requirements.
The legislation includes incentives that are part of a memorandum of understanding with the company that state officials haven’t been able to name as of late since they signed a nondisclosure agreement as part of negotiations with the company.
North Carolina-based Nucor Corp. announced in September that West Virginia was among three states in which executives were considering establishing a $2.7 billion steel recycling facility. Pennsylvania and Ohio were the other states.
Nucor manufactures steel and steel products and brokers certain steel components through The David J. Joseph Co., according to the company’s website. It is the largest recycler in North America, according to its website.
Justice is scheduled to give his State of the State address at 7 p.m. Wednesday, Jan. 12, in the House.
The bulk of the work lawmakers did this week amounted to the financial transactions of sweeping $315 million from the Department of Health and Human Resources and the Department of Homeland Security, moving that money to the Department of Economic Development, and then restoring the balance of Health and Human Resources and Homeland Security with money from the American Rescue Plan, which President Joe Biden signed into law last year.
Delegate Larry Rowe, D-Kanawha, had questions for House Finance Chairman Eric Householder, R-Berkeley, and Justice’s Chief of Staff Brian Abraham about the means by which the money goes from the state to the company.
The state can give the company $315 million in three stages as matching funds for the company’s investment, Abraham said Monday.
Once the company has spent $500 million for the business development, the state will match that with $125 million. After the company invests another $250 million, it will receive $150 million from the state.
The state only would make the third payment of $40 million, the one that would realize the state’s full $315 million investment, if the company invests in a second facility in the Northern Panhandle, Abraham said Monday.
State officials legally feel like they’re “on solid ground” to use the American Rescue Plan money to backfill Homeland Security and Health and Human Services, Abraham said Monday.
Most of the debate about the bill bundle came for Senate Bill 1001, which established the tax incentive package that representatives of the company asked for, Hanshaw said.
Under the new law, if a manufacturing company invests $2 billion in West Virginia and hires at least 500 full-time employees at twice the federal minimum wage, that company can be exempt from 50% of its corporate net income tax.
That means an investment of $2 billion could exempt a company from paying $1 billion in taxes, if they meet the job creation requirements.
The tax incentive was something representatives of the to-be-announced company specifically asked for, saying existing state code for corporate net income tax exemptions weren’t clear.
The new law also provides that a company meeting those investment and job requirements does not have to pay state or municipal sales taxes.
Hanshaw on Tuesday said the tax exemption is not the state giving away $1 billion to any company, and it was his position that any company that invests in West Virginia and uses that tax exemption will be adding revenue to the state’s tax base.
“Over the course of time they will incur significant tax breaks as a result of locating here,” Hanshaw said. “That’s a tax break against investment and against taxes that they are not paying today. This has not cost the State of West Virginia.”