CHARLESTON, W.Va. - West Virginia spends more per person on business tax credits and incentives than all but one other state, according to data released last week by The New York Times.
A Times analysis found that, according to the latest available data, West Virginia spends at least $1.57 billion on incentive programs for businesses each year.
Facing budget cuts and tight revenues over the next few years, state officials say the Times' report underscores the need to ensure the state is using its tax credit and incentive programs as efficiently and effectively as possible.
"We've got some real challenges ahead with the coal industry and our natural resources and the gaming industry, so we've got to be very careful with what we do from this point forward," Senate Finance Chairman Roman Prezioso, D-Marion, said last week.
Lawmakers have been studying how the state evaluates the effectiveness of tax credit programs and other incentives that have been passed in recent years.
Prezioso and others have also been critical of state tax and commerce officials for not regularly providing information about what companies are using incentives and what the economic impact of that use is.
"We want to know how many jobs are produced when we give a tax credit, and we want to know how much a business grows," Prezioso said.
He said lawmakers have passed more than $500 million in tax breaks in recent years through reductions in the corporate net income and business franchise taxes, as well as reductions in the food tax.
But with the state's Medicaid program consuming more and more revenue, Prezioso said he had to draw the line during the last legislative session on passing any more tax credits.
"The Economic Development Committee met weekly and they were passing us a tax credit on something every week," Prezioso said. "There were just so many of them we couldn't get our arms around it and subsequently we didn't do a whole lot of them."
The lone exception was the $20 million annual tax credit that was intended to help Century Aluminum restart its aluminum smelter. Century has since put that restart on hold after the state Public Service Commission did not approve a controversial power rate plan that would have increased rates for other consumers.
Prezioso said the Century credit is just one of many in state code, and lawmakers have no data as to how they are now being used, how they are benefiting the economy and how much they are costing the state.
"That's why we decided that there's got to be some kind of evaluation instrument with some safeguards in it because we can't give away every idea that comes down the pike," he said.
Last week, The New York Times began a series of reports on how states are using business subsidies and incentive programs.
The Times reported that states, counties and cities nationwide dole out about $80 billion in business incentives each year but said the governments do a poor job of ensuring the programs produce meaningful results.
Texas led all states in total incentives, providing more than $19 billion each year.
When measured on a per capita basis, West Virginia ranked second behind Alaska for the amount spent on incentives.
The Times said West Virginia spends about $845 per resident each year, compared with Alaska's $991 per resident. Texas' spending came in at $759 per person.