West Virginia taxpayers will pay $1.7 billion to lure a profitable steel company to a corner of the state where workers from Ohio and Kentucky could also be employed, in what some observers are calling a deal precipitate concluded during a special session of the legislature in January.
The deal includes $1.35 billion in multi-year tax credits and $315 million in cash to match the company’s infrastructure investments. The company in question is the steelmaker Nucor NUE,
Who in December issued a press release calling 2021 “the most profitable year in Nucor’s history” and alerting Wall Street to expect “the highest quarterly earnings in Nucor’s history” for the fourth quarter. Meanwhile, the unemployment rate in Mason County, home to the proposed plant, is 2.7%, the lowest on record.
Nucor did not respond to a request for comment.
As impressive as the numbers are, what may be more striking about this deal is how several state advocacy groups have banded together to voice concern about it.
“In this case, West Virginia taxpayers are responsible, while Kentucky and Ohio will see a large portion of any economic and tax benefits – although research shows these deals rarely deliver the promised value for communities. locals,” Kelly Allen said. from the West Virginia Center on Budget and Policy, in a version.
We don’t even know what the cost-benefit analysis of this agreement shows. A local report raised questions about economic analysis used for the approval of the agreement, which was adopted during a two-day extraordinary session of the legislature. MarketWatch contacted the West Virginia University professor responsible for this analysis, Eric Bowen, but he did not immediately respond to the request.
The Memorandum of Understanding between Nucor and the State can be found here. It documents the different criteria that the company must meet to receive each round of grants.
“They want the process to be compressed, for people to do things in a rush so there’s less chance of someone questioning anything or scrubbing the work,” said Greg LeRoy, executive director of Good Jobs First, a national business grant watchdog, in an interview with MarketWatch.
The steel mill that Nucor intends to build will be located in Mason County, which borders Ohio and is near Kentucky.
Representatives of political groups in Ohio and Kentucky have also expressed concerns.
“We added our voice because it’s important for states to work together to address the ever-increasing cost of corporate tax relief,” Jason Bailey of the Kentucky Center for Economic Policy told MarketWatch.
“Companies are playing states against each other and getting bigger and bigger breaks,” Bailey said. “The only way to stop this is for states to work together to agree to limit these subsidies, otherwise we will all be losers.”
Zach Schiller, research director for Policy Matters Ohio, acknowledged that the deal would likely bring “some benefits” to Ohioans. “Why look a horse present in the mouth? More often than not, this is not successful and it creates a race to the bottom and all the different states have less public resources to provide the services that are essential for business success.
Schiller and other advocates opposed to corporate subsidies believe the Foxconn debacle in Wisconsin, in which a high number of promised jobs backed by taxpayer money and a special use case of lake water Michigan never materialized was telling.
“It really highlighted the issues of reliance on economic development incentives,” Schiller said. While some state legislatures are beginning to adopt this way of thinking, others — like in West Virginia — may need more nudges.
A request for comment from MarketWatch to the Mason County Economic Development Authority was forwarded to the West Virginia Department of Commerce, which did not immediately respond.
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