By Jennifer Jett Prezkop
Photography by Tracy Toler
Hope is a fragile thing.
It’s the foundation on which we plan for the future and the action we take when the odds are against us. When hope is abundant, great things can happen. When it is in short supply, the drive for progress can be easily stymied.
In West Virginia, despite desperate efforts to find something in which to hope, confidence is withering as expectations of overcoming an economic impasse dwindle. Day by day, West Virginians do what they do best: find a way to survive. But West Virginians deserve more than mere survival. They deserve a thriving economy with policies that promote progress. They deserve a prospering present as much as a promising future.
Two West Virginia nonprofit organizations are doing their part to fight for the Mountain State’s future through important research, data collection and reporting. The Cardinal Institute for West Virginia Policy is dedicated to researching, developing and communicating effective public policies and acting as a voice for free market, and the West Virginia Center on Budget & Policy is a policy research organization that supports informed public dialogue and policy. Through the information these two independent organizations provide, policy makers gain knowledge, perspective and guidance to assist in facing the great task at hand: finding a solution to the ongoing budget deficit by jumpstarting the economy, creating jobs and diversifying the state’s industries.
For the economic development issue, West Virginia Executive magazine met with the executive directors of both organizations to discuss their lifelong connection to the Mountain State, the important work their organizations are doing in an effort to guide the state past these turbulent times and the solutions they recommend for addressing some of the state’s most pressing challenges.
Garrett Ballengee
Executive Director
Cardinal Institute for West Virginia Policy
WVE: Tell us about your background and your personal mission.
GB: I am a native West Virginian, born and raised in the Parkersburg area. After receiving a master’s degree in financial economics from Ohio University, I moved to Washington, D.C. to work in the policy research nonprofit space. I was there for about five years before I decided to move back to West Virginia to lead the Cardinal Institute for West Virginia Policy.
My personal mission is to help turn the lives of West Virginians around through economic growth and change the prevailing narrative about my home state. I have abundant hope that things can turn around in West Virginia. There is nothing cosmically pre-ordained that says West Virginia must always be among the least prosperous states in the country and an object of ridicule.
WVE: When was your organization founded, and what type of research does it conduct?
GB: The Cardinal Institute for West Virginia Policy is a 501(c)(3) nonprofit organization that was chartered in late 2014. The thought was that West Virginia needed to have a more robust marketplace of ideas and that a principled, research-driven, free-market voice such as the Cardinal Institute could contribute to the policy discussion in a meaningful way. Cardinal has several research areas, but we tend to focus on issues such as education, tax/fiscal policy, government waste and, more broadly, economic freedom.
WVE: Why is the research your organization does so important?
GB: I believe there are a few reasons why our research is important. First, it is, quite literally, Cardinal’s job to research and find good public policies that are grounded in logic and principle and bring them to West Virginia. Very few can say it is their full-time job to seek out good ideas, but Cardinal can.
West Virginia may often feel that it is on an island with unique problems, and while this is true to some extent, it’s true less often than one would think. Other states have faced similar problems to those West Virginia faces at one point or another and have seen success with certain policy prescriptions. Cardinal seeks those policies out for West Virginia. Second, it is not a good idea for a state’s policy agenda to be driven solely by one side or the other. Ideas improve through criticism and iteration, so having Cardinal’s free market perspective and research in the discussion should sharpen everyone’s saw.
Cardinal’s first major publication was the “Wild & Wasteful West Virginia” report that we released in January 2016. In the booklet, we highlighted instances of government spending we found to be dubious in nature and, at a minimum, taxpayers should be made aware of. To be sure, not everyone agreed that the things we highlighted should be classified as wasteful, but we wanted to start a conversation on the proper role of government and the proper use of taxpayer resources. We were extremely successful in starting that conversation. I think we upset folks from every political persuasion and every corner of the state, and, frankly, if we do our job correctly, that will happen from time to time. Obviously, legislators were very interested in the research, and they used “Wild & Wasteful West Virginia” to argue for lowering taxes or, at least, not raising them. It was very fulfilling to see legislators standing on the floor of the Capitol arguing that they refused to raise taxes because of the waste while holding up copies of Cardinal’s report. Over the last two years, I have seen legislators discuss nearly everything we highlighted in the report as a way to cut back on spending, from tax credits and cash to promoting/supporting sporting events to the elimination or privatization of the West Virginia Courtesy Patrol and many more.
WVE: Which of West Virginia’s current challenges do you find most concerning?
GB: The drug epidemic is an absolute economic, moral and cultural disaster for our state. While it is certainly a cause of many problems in West Virginia, the epidemic itself is symptomatic of the poor economic environment and lack of opportunity here.
While less tangible, a major challenge facing West Virginia is a certain sense of fatalism. West Virginia has never really been prosperous in any living person’s memory—things have been better but never great. Over generations, I think that instills a sense of “that is the way things have always been, so that’s how they’ll always be.” People are fearful or suspicious of trying anything new that, while it might make things better, may also make them worse. When you’re living on the razor’s edge economically, that’s simply a risk that most people just aren’t willing to take.
WVE: Where do you see opportunities for West Virginia to turn itself around?
GB: I believe the major opportunities in West Virginia will be generated by private citizens and small businesses. West Virginia needs to remove any barriers to entrepreneurship that prevent people from starting a business or make it more difficult to grow a business. West Virginia should also set a goal of making itself the easiest state in the nation to start a business. We have the lowest density of start-ups in the country and third-lowest percent of population that becomes entrepreneurs. Do I believe it is because West Virginians are, by nature, less entrepreneurial than people in other states? Absolutely not. However, I do believe there’s a sense that folks think they can’t do it here. Given that mindset, the state needs to make it as easy as possible to start a business here.
WVE: In terms of diversifying our industries, in which areas do you think we need to grow or explore?
GB: We cannot make our state diversify. There isn’t a person or group of people who can create diversity in our economy with the stroke of a pen. If we desire economic diversity, it will have to come from a tax code that doesn’t pick winners and losers and doesn’t penalize success, a regulatory environment that is predictable and fair and an education system that allows parents to choose the type of education that best fits their child’s needs. If we can avoid the temptation to design or in some way plan our economy, West Virginia’s most efficiently diverse economy will emerge spontaneously and not from bureaucratic or legislative diktat.
WVE: How do you think the issue of the state’s shrinking population should be addressed?
GB: Young people are attracted to places with opportunities and jobs. If West Virginia can have an economic environment that fosters job creation, we will begin to see young people stay here, and we will also begin to attract young families from elsewhere. Unfortunately, West Virginia will always have difficulty attracting non-native young people unless the state can rid itself of the backward reputation it has. The number one way to do that is through a robust, healthy economy that provides a variety of opportunities.
WVE: What can be done to improve West Virginia’s business climate ranking?
GB: I think West Virginia can learn a lot from the group of states that regularly sit atop business climate rankings, like Texas, Utah, North Carolina, Florida, Georgia and Wyoming. Highly ranked states are typified by a low-tax environment. For contrast, according to the Tax Foundation’s business climate rankings, the bottom 10 states tend to have “complex, non-neutral taxes with comparatively high rates.” They often have some form of right-to-work law and usually have a regulatory and legal environment that is predictable and stable. While it was controversial at the time, I think the right-to-work issue went the right way for the state if West Virginia hopes to attract business here. For example, Kentucky has seen a substantial increase in investment since they passed right-to-work. Hopefully, West Virginia will begin to see some benefits once right-to-work becomes the official law of the land. So, with right-to-work, recent tort reforms and the high likelihood that West Virginia gets a better tax code in the near future, I think the state has some brighter years ahead.
WVE: What are the major problems you see with our education system, and how should those be addressed?
GB: West Virginia is one of the few unfortunate states—at this point, five or six—whose families have no school choice options available to them. School choice—or education choice—is valuable for all of the same reasons that choice is valuable in every other sector of the economy. People do not ask what value there is in consumer electronic choice or pharmaceutical choice or banking institution choice. Consumers inherently understand the benefits that competition, or choice, offers in the form of higher quality and lower price. Families and children are the consumers of education, and they understand that logic too.
This same principle applies to education. Most people understand that competition begets choice. But choice—or rather the freedom to choose—is what drives competition. Makers of cellphones, cars, computer software and chocolate know we have a choice, and they respond by competing to offer us better products at lower costs. Choice works, and yet West Virginia parents are denied the freedom to choose when it comes to their children’s education. No choice means no competition to drive improvement and innovation. The idea that one size fits all in education, which is essentially what public schools are, is laughable. America’s public school system still operates on a 19th century Prussian model of education. This is no longer good enough for West Virginia’s students and families. For example, by the time they reach eighth grade, West Virginia’s students are a full two years behind their Massachusetts counterparts in math. In a technological world, West Virginia’s students cannot hope to compete with that.
From a policy perspective, we feel the system that promotes the most flexibility and choices for educating children, and what the Cardinal Institute is working hard to publicize, is what’s known as an education savings accounts, or ESA. Essentially an expanded voucher program, an ESA allows a parent to tailor an educational experience that best suits the child. Fundamentally, ESA programs give parents control over how their children’s education dollars are spent. Every year, participating parents receive a debit card preloaded with an amount calculated by taking a percentage of the funds it would have cost the state to educate the child in a public school that they can spend on private tutoring, private school tuition, educational therapy, online learning platforms and other qualifying educational expenses. In some states, unused money can even be saved and put toward the child’s college tuition. This program can be implemented at a savings to the state’s taxpayers, as well. It is a win-win for everyone.
WVE: With small businesses being the backbone of the economy, what should West Virginia be doing to support and encourage its entrepreneurs?
GB: A strong push for entrepreneurialism could be huge for the state in a few ways. I truly believe the state should formally adopt a day on the calendar that recognizes and honors entrepreneurs and the value they create for their communities and their fellow West Virginians. The day that recognizes such value creation could psychologically benefit the state, especially its young people.
From a policy perspective, the state needs make ensure it’s easy to start a business here. For example, get rid of burdensome occupational licensing; make it easy to file paperwork; ensure a level playing field by not enacting regulations that make it easier for larger, more well-established companies to comply; and have a tax code that is simple, transparent and neutral. Combined with education about entrepreneurship, that simple policy prescription would allow many entrepreneurial flowers to bloom, and the state’s economy would benefit in a huge way.
WVE: What do you think led to the current budget deficit, and how can this situation best be addressed for a long-term solution?
GB: Fundamentally, budget crises are the result of a misalignment in the spending and taxing equation. In the short run, a state can get away with tax increases to fill budget gaps, but that is counter-productive and iatrogenic—or the budget gap “cure” will worsen the disease of lackluster economic growth. Over time, the state’s economy will suffer because people will move capital—or themselves—to a friendlier tax environment and, eventually, a state runs out of things to tax. Illinois is a perfect example of this phenomenon. If a state wants to solve a short-run problem and at the same time set itself up to avoid future problems, it should lower government spending so that tax increases can be avoided. Again, every dollar that goes to Charleston in the form of a tax is a dollar that is not working in the productive sector. This does not lead to prosperity.
During the debate, I noticed that people seemed to view tax revenue or the amount of government spending as a leading indicator of prosperity, which is totally backwards. Increasing revenue should be a lagging indicator of prosperity because it is derived from productive economic activity—no productive activity, then no tax revenue and no government spending. When folks begin to view the amount of government spending as a leading indicator of growth, then I think that sets the state up for economic crises in the future. You can only attempt to get blood out of a turnip for so long.
I think we must solve our structural spending issue or West Virginia will continue to have fiscal problems more frequently than it probably should. By structural, I mean the three largest government agencies—the Department of Health and Human Resources, West Virginia Higher Education Policy Commission and Department of Education—and the size of the public workforce. For the largest agencies, I believe West Virginia should transition to zero-based budgeting every third year. That is, every year one of the major agencies should be required to undergo a zero-based budgeting process. Essentially, a zero-based budgeting process requires that agencies justify all their spending, not just an increase from the previous fiscal year.
For the public workforce, I believe West Virginia should undergo a large voluntary buyout program to remove folks from the government’s payroll. When you combine state and local workers, I believe West Virginia has the fourth-highest concentration of government workers in the country. Given the state’s demographic situation, I don’t believe this is sustainable anymore. Public and private entities alike have used voluntary buyout programs to cut down on long-term salary expenses, and I think West Virginia should embark on a program of its own.
I know there is a lot of controversy around using the Rainy Day Fund to plug budget gaps due to potential harm to the state’s bond rating. However, I believe it would make a major difference if we were to use the Rainy Day money to fund the removal of long-term salary expenses and not just as a one-time stopgap. I imagine the conversation with ratings agencies would look very different if West Virginia was able to say it used $50 million in Rainy Day money to remove the net present value of $200 million in salary expenses versus only $50 million in a one-time budget plug.
WVE: Why do you think the governor and the Legislature had such a hard time coming to an agreement on the budget?
GB: We are watching two different political and economic philosophies come to a head, and, in some ways, it is the culmination of a dispute that’s been building in our state for decades. Generally, one philosophy wants to double down on the idea that West Virginia’s salvation will come from Charleston. It calls for a larger role for state government because it believes West Virginia’s brighter future will result from more government programs, larger bureaucracy and more spending financed by taxpayers.
The other philosophy, again generally speaking, believes that if West Virginia is to have a brighter future, it will come from private entrepreneurs and job creators. It wants to minimize the amount of government involvement in private economic affairs and lessen the burden of government spending that is placed on taxpaying businesses and individuals. Fundamentally, this philosophy believes that a dollar in the hands of the entrepreneur or small business owner is more likely to grow an economy than that same dollar the hands of a politician or bureaucrat.
Of course, this is a small over-generalization, but that is the core of the debate, and both sides appear to be firm in their respective beliefs and principles. While many people are dismayed by the intransigence on both sides, I believe this is a healthy debate for West Virginia. West Virginia was governed by one philosophy for eight decades, and we are reaping the results of such an ideological monopoly. Though it wears on our patience, this debate is a very good thing for the state.
WVE: The budget crisis has a much broader impact than just costing the state for special sessions. Tell me about the broader reach of this situation and how the proposed cuts will threaten communities.
GB: There is no doubt that there will be winners and losers in the outcome of the special session. Cuts are especially poignant because those harmed are so easily seen—we can read a story on the individual whose Medicaid benefits were cut or the individual whose insurance was cancelled. The consequences are very real, very evident, and, no doubt, heart-breaking. However, what we do not see are the businesses that were never started because of a regulation or that unemployed neighbor that was never hired for a new job because that job was never created due to an overly-burdensome tax code. It’s what the French intellectual, Frederic Bastiat, called the “the seen versus. the unseen” consequences of public policy.
Ultimately, people—poor, middle-class, disabled, uneducated and the overly-educated—all need jobs and a robust economy to provide those jobs. West Virginia’s public policy should recognize that fact and make it as easy as possible for businesses to create those jobs. There will always be programs in place to provide relief for the truly indigent—the individuals that desperately and honestly need assistance. For the rest of us, we must ensure that jobs are abundant, so that prosperity is abundant.
WVE: Tell me about the actual impact higher education will feel if the education cuts are made. What kinds of impacts will this have, and how far-reaching will they be?
GB: Honestly, to a large extent, it is up to the institutions themselves. Typically, when a public agency has funding cuts, it tends to end highly public services that will elicit the loudest public outcry—it’s commonly known as the Washington Monument strategy. This strategy is so named due to the National Park Service choosing to close the Washington Monument in response to budget cuts. Agencies focus or shift their response to cuts toward highly visible programs and services instead of wasteful, duplicative or relatively unknown/unused programs.
For higher education, this strategy tends to manifest in threats of increasing tuition costs or generally increasing the burden on students in some way. I believe someone recently said that cutting funding to some of our public universities amounted to “balancing our budget on the throats of our young people” or something similarly hyperbolic.
This is in stark contrast to a strategy that most of us think would be employed—again, searching for unnecessary spending or administrative bloat that is enabled by government largesse. I wager that many of your readers are, at least, vaguely familiar with the meteoric rise in administrative—or non-academic—positions in our nation’s institutions of higher education. Over the last 25 years, the number of administrative positions in our colleges and universities has doubled, a growth rate that is more than double that of the growth in students. These are typically well-paying jobs, so I think I would start searching for positions that aren’t critical to the central mission of our universities—education—and start cutting those before I’d raise a dollar in tuition.
WVE: West Virginia is in dire need of resuscitation. As simple as possible, what do you think the answer is?
GB: The space for entrepreneurship, individual creativity and education choice must be expanded through a smaller, more limited government.
West Virginia can offer many things to many types of people if we are smart about the proper growth-facilitating polices. There is nothing unique about West Virginia that keeps it from enjoying the kind of economic prosperity that so many others in the U.S. take for granted. I have no doubt that if we can get the correct policies in place that one day we will be reading an article in the Wall Street Journal titled “The West Virginia Miracle.”
Ted Boettner
Executive Director
West Virginia Center on Budget & Policy
WVE: Tell us about your background and your personal mission.
TB: I grew up in Charleston, WV, and graduated from West Virginia University. I received a master’s degree in political science from the University of New Hampshire a couple of years later. In graduate school, I found out quickly that I was keenly interested in public policy and especially data-driven policy analysis to find solutions to social and economic problems such as income inequality, climate change, affordable health care, foreign interventions and racism. Before being hired as the executive director of the West Virginia Center on Budget & Policy in late 2007, I worked for the West Virginia Citizen Action Group.
I believe privilege confers responsibility. As a college-educated white male, I have a moral responsibility to speak out against the misery that people suffer from and the misery for which I share responsibility. That’s why my mission has always been to try to advance the causes of freedom, justice, equality and peace and try to speak out against the abuses of power that create so much hardship in our society.
WVE: When was your organization founded, and what type of research does it do?
TB: The West Virginia Center for Budget & Policy was founded in 2007 to ensure that sound research and analysis helps provide a foundation for advancing public policy in West Virginia. Our mission is to support an informed public dialogue on public policy issues that impact working families and ensure our work is timely, relevant, accessible and credible. The center also believes in the necessary and positive role the public can play in shaping positive outcomes while also making government more transparent and accountable to West Virginians. Our research is focused on three central areas: tax and budget, family economic security and economic development.
WVE: Why is the research your organization does so important?
TB: The center is committed to presenting issues in an accurate and understandable manner so lawmakers and the public are better informed on how economic and social issues affect people’s lives. The center believes sound research and analysis and public policy go hand in hand.
Our work on creating a severance tax permanent trust for the state was adopted with the creation of the Future Fund in 2014. Our work has also played a pivotal role in raising the state’s minimum wage, adopting Medicaid expansion under the Affordable Care Act (ACA), stopping harmful cuts to child care assistance and the West Virginia Supplemental Nutrition Assistance Program, special interest tax cut giveaways and increasing the tobacco tax, just to name a few.
WVE: Which of West Virginia’s current challenges do you find most concerning?
TB: The insatiable drive toward austerity is one of the state’s gravest challenges. As we continue to underinvest in higher education, infrastructure and our local communities, the state will likely continue its decline as more people leave the state, more towns shutter and the quality of life deteriorates.
As our recent analysis in the “State of Working West Virginia” report showed, West Virginia tends to lag behind other states because of its low post-secondary educational attainment, outdated job skills, unhealthy population, lack of economic diversity, inadequate physical infrastructure like broadband, rugged topography and low population density. Along with these factors, West Virginia has a low-wage economy that doesn’t produce enough demand for stronger economic growth. None of these problems can be solved by trickle-down approaches to economic development that squeeze the middle class, which is the principal driver of economic growth and business development. A strong middle class can provide a stable source of demand for goods and services, which motivates businesses to innovate, invest and hire. A strong middle class also incubates entrepreneurs and innovators and helps hold government more accountable through political participation.
WVE: Where do you see opportunities for West Virginia to turn itself around?
TB: There are enormous opportunities in West Virginia for the expansion of agriculture; the high-tech industry, like aerospace; tourism; cleaner energy; and biomedical research and development, among other things. However, it will be very difficult to grow these sectors without significant investments from the public and private sectors and a concrete vision grounded in best practices.
West Virginia does have a comparative advantage to other states in its low cost of living, strong communities and rich abundance of natural assets and resources. To embrace these opportunities, policymakers and other stakeholders need to put improving the quality of life in the state at the top of their agendas if they want to attract outside investment and retain more of the state’s youth that tend to leave for better opportunities.
WVE: How do you think the issue of the state’s shrinking population should be addressed?
TB: While West Virginia is losing residents to other states, it’s not losing them at any amount greater than any other state loses residents. Combined with the fact that West Virginia was one of only two states with more deaths than births in 2015, you can see that the state isn’t necessarily struggling to keep people from leaving. It is struggling to bring them in.
The best way to attract and retain our youth is to improve the quality of life in the state. This means providing more recreational opportunities, cleaner towns, better infrastructure and a world-class education system and making higher educational as affordable as possible. We also need to include more young people in the political process at all levels.
If nothing is done and our state continues to embrace trickle-down and low-road approaches to development, more towns in the state will shutter, infrastructure will continue to deteriorate, fewer kids will go to college or trades school and large parts of the state will simply become uninhabitable.
WVE: What can be done to improve West Virginia’s business climate ranking?
TB: Most business climate rankings are fraught with serious methodological problems because they tend to be driven more by ideology than a fair and useful treatment of the data. Business climate rankings often contradict each other and offer very little insight into how to grow a state’s economy. For example, the Tax Foundation says West Virginia has the 18th best business tax climate while the Council on State Taxation says West Virginia has the sixth highest business tax burden in the country. More importantly, the business climate rankings are poor predictors of economic growth. One reason these rankings are not very useful is the misguided belief that state and local business taxes are the primary state policy tool for bringing about growth and prosperity.
While taxes are important, they pale in comparison to other cost factors such as labor, energy costs, rent or property, capital purchases, raw materials, transportation and other business support services that have a greater impact on profit margins, especially in different states.
Many factors other than taxes can influence state economic growth and business investment, including climate, quality of the workforce, state and federal regulations, energy prices, economic recessions, federal fiscal and monetary policy, quality of life and amenities, consumer demand, public infrastructure, transportation, available sites, proximity to national markets and suppliers and access to raw materials.
According to Area Development magazine, corporate CEOs cited a skilled workforce and highway accessibility as the two main factors they look for when considering business expansion. Neither of these in West Virginia can improve without an adequate tax system that provides enough resources to make these investments. If you want to address the state’s most pressing problems, which include a very undereducated workforce, you have to be willing to make the investments necessary to make it happen.
If we want to grow West Virginia’s economy, the focus should be on creating a stronger middle class that can provide a stable source of revenue and jobs for businesses. Without customers, businesses won’t make the investments and hire new workers.
WVE: Another area of concern has been our education system being continually ranked at the bottom for results and cost. What are the major problems you see with our education system, and how should those be addressed?
TB: Our state’s education system, as far as I am aware, does not rank at the bottom. Our high school graduation rate is slightly above the national average. That said, our reading and math scores do rank near the bottom. However, this is more a function of the state’s high childhood poverty rate compared to other states. While West Virginia does spend near the national average on K-12 education per pupil, this is mostly driven by our above-average spending on transportation and instructional benefits that are a result of school consolidation and low population density and paying down our teachers’ unfunded pension liability.
A look at national figures indicates that low test scores on math and science are associated with higher child poverty. A recent study by Duke University found that one of the central problems with most education reform initiatives is that they do little to address large the “body of evidence documenting that students from disadvantaged households on average perform less well in school than those from more advantaged families.” Another recent study funded by the National Institute of Health also found that poverty-induced stress—such as crowded conditions, financial worry and lack of adequate child care—“lead to impaired learning ability in children from impoverished backgrounds.”
In fact, numerous studies have shown that children who grow up in poverty are not only performing badly on tests, but they are also more likely to complete less schooling, become a teen parent, have lower earnings as adults, engage in crime and reduce our economic output.
As professor Stephen Krashan of the Rossier School of Education at the University of Southern California recently pointed out in the Pittsburgh-Post Gazette, “The problem is poverty. Our average test scores are mediocre because the United States has such a high level of child poverty, the second highest among economically advanced countries (23 percent). Study after study shows that poverty has a devastating effect on school performance.”
While pursuing education reform to find cost savings and improve programing is very important to our state’s future, it is equally—if not more—important that we look at underlying factors such as child poverty that appear to play a much larger role in education outcomes. One important step West Virginia could take to address child poverty would be to ensure that every child in West Virginia has access to quality childcare and after school programs and other early childhood development programs like WV Birth-to-Three. These programs not only ensure that young children get a better start in life, but they also make the state a better place to live, work and raise a family.
WVE: With small businesses being the backbone of the economy, what should West Virginia be doing to support and encourage its entrepreneurs?
TB: Between 1995-2013, 83 percent of new private sector jobs in West Virginia came from homegrown jobs, such as start-ups and expansions of existing businesses.
Currently, West Virginia tends to put most of its economic development investments in chasing smokestacks instead of small business development and entrepreneurship. Increasing the share of state economic development resources that go into small business development with expanded performance-based investments in new and existing entrepreneurship would be a step in the right direction.
Other avenues include starting buy local campaigns, creating more space for entrepreneurs to work, connecting entrepreneurial support resources to better connect business, shifting focus to enterprise development with a focus on providing technical support and mentorship programs and focusing on key sectors such as local foods, health care, energy efficiency and tourism.
Overall, the best way to promote entrepreneurialism is to support education at all levels, since a majority of entrepreneurs and inventors come from the middle class who have the skills and financial stability needed for successful risk taking.
WVE: What do you think led to the current budget deficit, and how can this situation best be addressed for a long-term solution?
TB: The bare-bones budget that passed on June 15 is not going to help our state deal with any of its pressing problems and will likely make all of them worse as we pull back from investments in higher education, health care services and other areas. Governor Justice’s first budget bill offered a much more balanced approach to our state fiscal crisis.
Going forward, it is crystal clear that West Virginia will need to raise a substantial amount of revenue just to maintain our current level of services, let alone get back to where we were before the tax cuts, or make the additional investments we need to propel our state forward. The good news is that a large majority—70 percent—of West Virginia voters are willing to pay more in taxes if the money goes toward maintaining our key priorities, such as education, public safety and roads. It’s time to put the people before our politics.
WVE: Why do you think the governor and the Legislature had such a hard time coming to an agreement on the budget?
TB: Several reasons. The disagreement is two-fold. There are some who want to use tax reform as a way to significantly shrink government investments in the future, which is why almost all of the tax plans being proposed generate negative revenue growth after the first year of implementation. The House and Senate had two different paths in their tax plans. While the House wanted to lower the sales tax by broadening the base and lowering the rate, the Senate—along with the governor—wanted to phase out the personal income tax and replace part of the revenue loss with a higher sales tax rate and broader base. Many House members correctly understood that the Senate tax plan meant giving the wealthy tax breaks while shifting the tax load onto low- and middle-income families. Moreover, many of the House members felt a higher sales tax would impact retail consumption in their districts, as shoppers would make purchases across the border or online. The Senate, meanwhile, refused to raise the sales tax or increase revenue for Fiscal Year 2018 without large reductions in the income tax.
WVE: The budget crisis has a much broader impact than just costing the state for special sessions. Tell me about the broader reach of the budget crisis and how the proposed cuts are threatening communities.
TB: The budget is the clearest indication of our state’s values, and over the last years, we have scaled back investments, especially in higher education, which has been cut by more than $130 million since 2008 after adjusting for inflation. If we continue going down the path of austerity and trickle-down economics, parts of our state will simply become uninhabitable over the coming years as schools and libraries close, roads and bridges deteriorate, towns are abandoned, water systems crumble and health clinics and social services agencies close.
WVE: Tell me about the actual impact higher education institutions will experience due to this year’s budget cuts.
TB: Falling public support for the state’s universities and colleges has led to tuition rising, making the reality of higher education much less attainable for many of West Virginia’s families. Average tuition at West Virginia’s public colleges and universities has increased by $4,200 since 2002, a 147 percent increase far outpacing inflation.
As tuition has increased, so has student debt. The average debt of a college graduate in West Virginia has increased by 70 percent since 2005.West Virginia also has the second highest student loan default rate in the country. Tuition increases have eroded the value of the state’s financial aid programs. The share of tuition covered by the PROMISE Scholarship has fallen from 100 percent to 70 percent.
Investing in higher education to keep tuition affordable and quality education at public colleges and universities would help West Virginia develop the skilled and diverse workforce it will need to grow its economy.
WVE: With a repeal and replacement of the ACA in the works, tell me about the cost and impact to West Virginians these changes will have.
TB: For West Virginia, it means the possibility of denying affordable health coverage to more than 200,000 West Virginians who have gained health care coverage from the ACA.
The ACA represents one of the largest investments in human capital that West Virginia—and the nation—has ever seen. If the ACA repeal goes forward, including the repeal of Medicaid expansion and health insurance premium credits on the marketplace, and that money suddenly evaporates, every part of our state will feel the impact.
According to a recent analysis by The Commonwealth Fund and George Washington University, West Virginia would lose approximately 10,200 jobs by 2026 if the American Health Care Act is passed by the U.S. Senate, more than half of which would be in the health care sector alone. The rest would come from construction, retail, real estate, finance and other industries.
Hundreds of thousands of West Virginians would also lose critical patient protections under a repeal. This includes about 800,000 West Virginians, including 91,000 children, with pre-existing conditions that could be denied coverage or face higher premiums. More than 500,000 West Virginians could see caps placed on the amount an insurer would spend over each person’s lifetime, and the same number of people could lose access to free preventive care such as immunizations and cancer screenings. Women could be charged premiums as high as 57 percent more than men, and 12,000 young adults in the state could be booted off of their parents’ health insurance plans.
The ACA has been a lifeline to West Virginians who have either gained coverage from Medicaid expansion or insurance subsidies or who have been protected from harmful practices banned by the ACA. There is little doubt that our state’s economy has benefited tremendously from the large influx of federal funds that has boosted jobs and helped our local communities.
It is no secret West Virginia has one of the unhealthiest populations in the nation, which not only means we have more premature deaths and higher health care costs than most states but is also one big reason why our economy struggles to prosper and why we have the lowest labor force participation rate in the country. That’s because a healthy workforce is a productive one. The last thing we should be doing is stripping away health care coverage from hundreds of thousands of West Virginians.
WVE: West Virginia is in dire need of resuscitation. As simple as possible, what do you think the answer is?
TB: There are no silver bullets to fix West Virginia’s economic problems. We need an agenda for shared prosperity that improves our health and wellbeing, reduces poverty and boosts labor force participation and wages while increasing the level of education and workforce skills necessary to grow our state’s economy. In short, we need a more productive workforce along with better public infrastructure, and this can’t happen without improving our long-term fiscal health.
