Budget Beat – July 11, 2014

Here’s Why You Want to Be a Part of This Month’s Our Children Our Future Policy Workshops

policy workshop logo

1. This cool three-minute video. Check it out, you’ll feel inspired.

2. You care about the future of West Virginia.

And part of that means taking care of the state’s workers. We can do a better job at that by passing legislation to create a paid sick days and family leave policy. This is good for workers and their employers.

We can also help those same workers prepare for retirement with Voluntary Retirement Accounts (VERA).

Lack of retirement assets is one of the leading causes of poverty among the elderly. Learn more about how Voluntary Retirement Accounts can prevent this on July 22 at the Northern Regional Workshop, Gaston Caperton Center, Clarksburg, WV.

Every day workers are faced with the impossible choice of going to work sick or staying home, losing pay and risking job loss. Just three and a half days of missed work because of illness is equivalent to an entire month’s groceries for the average family. Find out how we can make paid sick days and family leave the law in West Virginia on July 24 at the Central Regional Workshop, St. Timothy in the Valley, Hurricane, WV.

There is a wide variety of workshops taking place not only in Clarksburg and Hurricane but also in Lewisburg and Martinsburg.

Help bring an end to child poverty in West Virginia. Need more reasons? Check out this week’s editorial in the Clarksburg Exponent Telegram.

Our Children Our Future with Children Silhouette

Why is West Virginia GDP Up and Employment Down? Fracking?

Workforce West Virginia recently released 2013 data on employment and wages that show West Virginia has about 7,000 fewer jobs (on average) in 2013 than it did in 2012. In contrast, two weeks ago the U.S. Bureau of Economic Analysis released state data for real Gross Domestic Product growth that showed West Virginia’s economy grew by 5.1 percent from 2012 to 2013 (after adjusting for inflation), which was higher than all but two states. 

How can West Virginia’s economy be growing when jobs are declining? Let’s take a closer look to find out why.

First, let’s look at West Virginia real GDP growth compared to job growth provided by the Quarterly Census of Wages and Employment (which included workers that are covered by unemployment insurance) that is released by Workforce West Virginia. As you can see in these two charts, the relationship between the growth of the economy (real GDP) and jobs has been tenuous over the last several years. While real GDP grew by 16.2 percent since 2002, job growth was an anemic three percent.

real gdp vs job 1

real gdp job 2

The gap in growth in 2012-2013 was especially large, with real GDP growing 5.1 percent while job growth was down one percent. To help explain this disparity, it important to first look at why real GDP grew in the first place. As this next chart shows, it is overwhelmingly due to the the mining sector, which is primarily the coal and natural gas industries. Without this growth of $3.3 billion (40 percent), West Virginia would have experienced negative real GDP growth from 2012 to 2013. 

mining real gdp

The mining sector is also becoming a much larger piece of the state’s economy, accounting for nearly 17.8 percent of the state’s GDP compared to just 6.5 percent in 2002. The recent uptick in the mining sector is due to the boom in shale gas extraction in the north-central part of the state. Meanwhile, West Virginia coal production has declined over the last several years and so has its share of the economy.

Interestingly, the huge jump in mining GDP was not the product of higher wages or employment. Total mining wages declined slightly from $2.6 billion in 2012 to $2.5 billion in 2013 and total mining employment fell by 1,830 (natural gas gained 567 jobs, but looking more broadly at other natural gas sectors like pipeline construction and transportation, distribution, and field machinery, it fell about 173 jobs).

There could be several reasons for the dramatic one-year change in mining real GDP. It could be that the mining real GDP data are wrong, which is always subject to revisions over time, or that the new and more comprehensive revisions of state GDP captured something new in 2013. Or it could be that there was a glut in natural gas storage in the state and that it was finally sold in 2013 at a higher price that boosted productivity and GDP. Another thing to keep in mind is that the natural gas industry is very capital intensive, meaning that it relies less on workers and more on machinery and equipment to produce its value-added product.

While we cannot say with certainty why mining GDP is growing rapidly at the same time wages and employment are stagnating, we can say that it has not translated into broader economic growth in the state in 2013. We can also say that the link between GDP growth and wage growth is not as strong as it used to be. As the chart below shows, wages used to make up over 50 percent of West Virginia’s GDP. Today, they are only 40 percent. There has also been a similar decline in total compensation, which includes pensions, health care, social insurance, and profit-sharing. This means that workers are not benefiting from productivity growth and that more money is flowing to the top via profits and capital income.

Over the last several years, West Virginia has exacerbated this problem by cutting corporate taxes and gutting its estate tax while investing less in higher education and other budget priorities. Reversing this trend in inequality and boosting quality job growth will require policy action at both the federal and state level.

gdp wages and comp

Budget Beat – June 27, 2014

Our Children Our Future Policy Workshops Are Just Around the Corner

No matter where you live in West Virginia there is an opportunity for you to get involved in the Our Children Our Future campaign to help bring an end to child poverty.

Join us for a day-long training to learn how to make change in your community and throughout the state through policy advocacy, healthy lifestyles/Try This! promotion, and voter education and turnout.

The Our Children, Our Future Campaign has built a statewide campaign to win 12 policy victories in the past 20 months through working with our partners across the state to identify and promote state policy opportunities that will improve communities and help us move toward our goal of ending child poverty in West Virginia.

The Regional Policy Workshops are where community leaders from across the state propose policy changes to work on over the coming year – and where you can get connected with the issues that most interest you.

Click on the links below to see the wide variety of agenda items. Topics include workplace bullying, energy-efficient affordable housing, and the WV Healthy Families Act: Paid Sick Days & Family Leave and much, much more.

July 17: Southern Regional Workshop, WV School of Osteopathic Medicine, Alumni Center, Lewisburg, WV

July 22: Northern Regional Workshop, Gaston Caperton Center, Clarksburg, WV

July 24: Central Regional Workshop, St. Timothy in the Valley, Hurricane, WV

July 29: Eastern Regional Workshop, Blue Ridge Community/Technical Center Martinsburg, WV
Our Children Our Future with Children Silhouette

Fallout Continues from Higher Education Cuts

Last week the Higher Education Policy Commission spoke out about how the pattern of budget cuts and tuition hikes needs to end if low-income students and their families are to afford college. Citing the WVCBP’s analysis of tax cuts and their effect on the state budget, the Clarksburg Exponent Telegram ran this story on how tuition hikes will disproportionately impact those already struggling to pay for a college degree.

Next Tuesday, free movie:

How can white people use their privilege to take a stand against racism? Come and watch “Cracking the Codes: the System of Racial Inequality” on Tuesday, July 8 at 2:30PM at Temple Israel on 2312 Kanawha Blvd East. See a film clip.

Job Opportunity

Coalition partners are exploring the possibility of forming a new 501-c-4 advocacy organization for West Virginia. This group would work to increase voter turnout in key races, educate West Virginians about issues of child and family poverty, and build a statewide membership base. If you know someone who might be interested in leading such an organization, please refer them to Stephen Smith as soon as possible. The ideal candidate would have electoral organizing experience and the skills (fundraising, administration) to lead an organization with 5-10 paid canvassers. (Salary commensurate with experience, $35-55k/year).

Budget Beat – June 20, 2014

West Virginia Birthday Wishes:

birthday cake

Making higher education an affordable possibility for the state’s young people:

There was disappointing news for college graduates last week as a measure aimed to allow them to refinance their college loan debt at today’s lower interest rates was blocked in the U.S. Senate.

West Virginia’s college grads average $25,000 in student loan debt for a four-year degree, above the national average. Sadly, the Mountain State ranks highest in delinquency on those loans.

And, with the cost of attending West Virginia’s colleges and universities continuing to rise, the problem is likely to get worse. Restoring budget cuts to the state’s colleges and universities, and making college affordable, will help keep West Virginia’s talented young people here at home.

Read more from WV Metro News.

Expanding access to affordable health care/curbing tobacco use:

Expanding Medicaid coverage under the Affordable Care Act in West Virginia was a huge step in providing health care to the state’s residents. Another way is to provide more choices in the state’s health insurance marketplace. Just announced is the addition of the West Virginia Health Care Cooperative, a spin-off from Kentucky’s marketplace, that will give those shopping for coverage more competition and possibly lower health care premiums starting in 2015. Read more in this week’s Charleston Gazette.

Despite a national downward trend, West Virginia’s teens continue to use tobacco products at a high rate. Brandon’s blog post highlights the numbers and the need to educate our young people, as well as raise the tobacco tax, both in hopes of reversing these statistics.

Providing a greater variety of employment opportunities:

West Virginia, like Kentucky and Wyoming, has historically had a fairly narrowly defined way to grow its economy – expand development of it natural resources to create for economic growth. These three states fall among the bottom five in terms of economic diversification according to the 2014 State New Economy Index. Read more in this week’s Charleston Gazette.

A more diversified economy, funding for higher education, and affordable health care will all help keep working families in West Virginia.

In case you missed it, Ted had a great op-ed recently which talked about the state’s, and the nation’s, continuing struggle with the growth of income inequality.

Events like these:

Our Children Our Future Policy Workshops: Registration is now open for the Our Children Our Future upcoming regional policy workshops. Each policy workshop will allow campaign partners the opportunity to participate in trainings on voter registration, local policy change,and policy advocacy trainings. Local champions, consisting of community members and legislators, will participate in a panel discussing how to effectively advocate for our children and families.

July 17: Southern Regional Workshop, WV School of Osteopathic Medicine, Alumni Center, Lewisburg, WV
July 22: Northern Regional Workshop, Gaston Caperton Center, Clarksburg, WV
July 24: Central Regional Workshop, St. Timothy in the Valley, Hurricane, WV
July 29: Eastern Regional Workshop, Blue Ridge Community/Technical Center Martinsburg, WV

Our Children Our Future with Children Silhouette

Homebuyer Workshops: On June 24 and July 29, KISRA will sponsor workshops geared toward turning renters to homeowners. They are especially aimed at low- and moderate-income families. Learn more here.

Free movie: How can white people use their privilege to take a stand against racism? Come and watch “Cracking the Codes: the System of Racial Inequality” on Tuesday, July 8 at 2:30PM at Temple Israel on 2312 Kanawha Blvd East. See a film clip.

Strengthening Families in West Virginia Conference: On September 25, KISRA will sponsor an all-day conference at the Charleston Marriott Town Center on Empowering Fathers and Families for the Future. Registration information is available here.

West Virginia Teens: Continuing High Rate of Tobacco Use, Other Unhealthy Behaviors

Last week, the CDC released new data from its biennial Youth Risk Behavior Surveillance System (YRBSS).  The YRBSS surveys thousands of middle and high school aged youth across the country, questioning them about a number of health and behavioral risk factors, everything from diet to alcohol use to sexual activity.  The survey is large enough to give a clear picture of behavior among youth across the country and how it varies by state and region.

The new data provide some interesting insight into the behavior of West Virginia youth and how they compare to their national counterparts. While there are certainly some promising trends in West Virginia, such as the plummeting use of meth (surprising, right?), there are also a number of very worrisome results of which we must be aware.

Tobacco use is overwhelmingly the factor that jumps out the most. While high school age smoking has dropped dramatically in West Virginia and across the country since the early 1990s, West Virginia remains significantly behind the rest of the country in both the rate of declining use and the number of teens who currently smoke.

Source: CDC Youth Risk Behavior Surveillance System, 1993-2013 Results

Source: WVCBP analysis of CDC Youth Risk Behavior Surveillance System, West Virginia 1993-2013 Results

The figure above shows the trends of high school age youth who are current smokers since 2009.  As you can see, nationally this rate has declined from 19.5 percent of high schoolers to 15.7 percent, a drop of nearly 20 percent.  In West Virginia however, the drop has not been nearly so steep and, in fact, has ticked up slightly since the last survey in 2011. At 19.6 percent, West Virginia high schoolers are 25 percent more likely to smoke than their peers across the country.

Another factor where West Virginia’s youth does poorly is in soda consumption. Regular soft drink consumption is known to increase the risk for a number of health conditions such as obesity, diabetes, and dental cavities. West Virginia youth drink much more soda than American youth on the whole. High schoolers here are 40 percent more likely to drink at least one soda per day and 67 percent more likely to drink three or more sodas per day.  The figure below highlights these differences:

Source: WVCBP analysis of CDC Youth Risk Behavior Surveillance System, West Virginia 1993-2013 Results

Source: WVCBP analysis of CDC Youth Risk Behavior Surveillance System, West Virginia 1993-2013 Results

Other factors where West Virginia youth behaviors were significantly worse than the national average include being sexually active, not using a condom during most recent sexual intercourse, wearing a seat belt, and attending physical education classes in school. The table below lists every factor in which West Virginia’s youth reported unhealthier or riskier behaviors than their peers nationally:

Youth Risks 2

Source: CDC Youth Risk Behavior Surveillance System, West Virginia 2013

On most other issues like alcohol use, illicit drug use, and diet, West Virginia’s youth fell around the national median. Of course, regardless if it’s about the same as the national rate, the fact that kids are still participating in many of these behaviors is something to worry about, such as the five percent of West Virginia high schoolers who have used cocaine.

Why does any of this matter?  Because we know that most health behaviors are established early in life and if we don’t get this ship turned around for our youth, then we’re going insane if we expect to have healthier adults. 

Budget Beat – June 6, 2014

Coal In Decline Even Without New EPA Rules

New EPA rules to cut carbon emissions have dominated the headlines since they were announced. Arguably no state had a stronger negative reaction than West Virginia where the changes are seen as reigniting President Obama’s “War on Coal.”

Coal production has been in decline for years, however, and this trend will continue despite the new rules. For a broader perspective, here is Froma Harrop’s column this week which quotes the WVCBP’s Ted Boettner. Contributing to the decline is the expansion of shale drilling as Ted explains in this Charleston Gazette article.

Ted also appeared on WV Metro News’ Talkline on Wednesday explaining that the time has come for West Virginia’s leaders to take a seat at the table to plan for the future, instead of fighting a losing battle. Read more here.

West Virginia’s Medicaid Expansion Success Story

Not only did West Virginia expand Medicaid coverage under the Affordable Care Act, it also did a great job in notifying people they were eligible. It did such a good job, in fact, that only one other state, Oregon, has seen a higher increase in enrollment.

This is great news for the Mountain State and for its residents who now have access to affordable health care. Read more in this Charleston Gazette article which quotes our Health Policy Analyst Brandon Merritt.

And here’s more on a study showing that Medicaid expansion leads to a reduced high school drop-out rate and increased college attendance among low-income students.

Pay Raises for State Workers Good for Economy

This week WVCBP Fiscal Policy Analyst Sean O’Leary was quoted in the Charleston Daily Mail discussing this year’s raise for state employees and teachers. Investing in the state’s K-12 education system is an investment in the state’s children and their future. Boosting state workers’ wages boosts the economy, giving people more to spend and helping to raise them closer to the national average. West Virginia ranks just 47th in the nation in average salaries for local and state workers.


WVU Students Feeling Effect of Budget Cuts

State budget cuts continue to have their impact, this time with West Virginia University raising its tuition in response to cuts in higher education funding. In fact, the Promise scholarship will no longer fully cover tuition costs at WVU. Speaking of covering tuition costs, the amount the state has given away in tax cuts to businesses would more than pay for in-state tuition at all of its public colleges and universities. Read more in Sean’s blog post.

Try This Conference Kicks Off Today

This weekend in Buckhannon folks from around the state are participating in the first annual Try This Conference. Health Policy Analyst Brandon Merritt is a panelist on both Friday and Saturday at the event which covers a wide array of topics on community, health and wellness.


We’re Hiring! 

Last week we said so long to Alyson Clements, our Outreach Coordinator, as she relocated to Washington, DC to join her husband. Her absence leaves a huge gap in our staff and we are now starting the process of finding a replacement. Please help us get the word out that we are hiring. The position is full time with an excellent benefits package. The full job description is available here.

Tuition Hikes the Result of Tax Cuts

The WVU Board of Governors announced yesterday that the state’s flagship university would be raising its in-state tuition by 8% this year, and by 4% for out-of-state students. The increase amounts to about $500 for in-state students, bringing tuition at WVU to just under $7,000 per year. In addition to tuition, on-campus housing and meal costs are also increasing.

The tuition hike now means that the Promise Scholarship, which once covered full tuition, will now only cover 68% of WVU’s annual tuition costs.

Rising tuition isn’t good news for West Virginia’s workforce. West Virginia already has the lowest levels of educational attainment among its population, and tuition increases aren’t going to help. In fact, a 2011 study found that for every $100 added to tuition, enrollment in higher education will fall 0.25%.

WVU’s Board of Governors pointed to the recent cuts to higher education, $20 million over the past two years, as the reason for the tuition increase. This isn’t the first time, nor will likely be the last time, that the state’s budget cuts have led to higher tuition.

Higher education as a whole has seen a $51.8 million cut over the past two years, but state support had been weakening even before the cuts. Even if enrollment remains flat this year, the state will be spending $1,780 less per student in FY 2015 than it did in FY 2008, adjusting for inflation.


And while higher education funding was cut in recent years, it looks unlikely that those cuts will be restored. According to projections in the governor’s FY 2015 budget, the state will appropriate less for higher education in FY 2019, than it did in FY 2008. Adjusting for inflation, higher education funding will be down by over $168 million, or 29.4 percent, by FY 2019.


The reason for the cuts to higher ed? The state has enacted a series of expensive tax cuts since 2006, which have cost the state hundreds of millions of dollars over the past several years. Over half were business tax cuts, including the phase-out of the business franchise tax, a reduction in the corporate net income tax rate from 9% to 6.5%, and several other smaller business tax cuts, which will reduce revenue by an estimated $236 million in FY 2015. Altogether, the tax cuts have amounted to $425 million in forgone revenue. And so far, there is no evidence that these tax cuts have produced any of their intended results, other than driving up the costs of higher education.


To put the impact of the tax cuts on the state’s budget in context, look back at this post. The revenue lost to the just the business tax cuts would have been enough to provide free tuition to all in-state undergraduate student in West Virginia. 

As for what all of this says about our state’s priorities, I’ll let incoming WVU student government president and former WVCBP intern Chris Nyden have the last word, “When the Legislature cuts funding to higher education, it not only hurts the ability of low-income students to pursue a college degree but it means fewer jobs and a weaker economy. There is no better way to create good-paying jobs, a stronger economy and a better future for West Virginia than investing in higher education. Instead of ineffective and costly tax cuts that are saddling debt on the backs of our future workforce, the state needs to invest in our greatest asset — our students — and create sustainable growth.” 

Could Surging Steel Imports Lead to the Further Decline of West Virginia Manufacturing?

A new report from the Economic Policy Institute outlines the recent risk to the U.S. steel industry from a rapid increase in steel imports. According to the report, in facing the lack of demand in the aftermath of the Great Recession, steelmakers in other countries continued to add production capacity with government support. As the U.S. recovered from the recession, those countries have leveraged their excess capacity, exporting the surplus at below-market rates, with the U.S. as the major target for exports.

U.S. steel imports increased from 28.5 million net tons in 2011 to 32.0 million net tons in 2013, and have grown even more this year. Imports have also grown relative to domestic production and consumption. The jump in imports has led to a decline in the domestic steel industry, with falling production and income, along with layoffs or reduced wages for thousands of workers.

The steel industry supports over half a million jobs in the U.S., including 6,200 in West Virginia. And as we showed in our 2013 State of Working West Virginia report, the fates of the steel industry and the rest of manufacturing, as well as the coal industry, are closely tied. The steep drop in coal mining and manufacturing employment in West Virginia during the 1980s was directly tied to the collapse of the region’s steel industry.


In the past, trade remedies have provided relief to the U.S. steel industry from the stress of overcapacity, excess supply, and subsidized steel exports, and their effective use can make a difference again. Other efforts, like West Virginia’s Buy-American proposal, would require the use of U.S.-manufactured products in taxpayer-funded projects in the state, encouraging domestic production over foreign imports.

Budget Beat – May 23, 2014

Funding Cuts Restored

This week, the legislature voted to fully restore funding cuts to family-support programs that Governor Tomblin had vetoed in March. Governor Tomblin has said he will sign the legislation this time around. Support in the House of Delegates was unanimous, with a vote of 90-0.

In reversing course, the governor and legislators responded to pressure from the Our Children Our Future Coalition. Ted Boettner and Jim McKay authored this oped which appeared in last Sunday’s Charleston Gazette Mail. And the coalition gathered at the Capitol on Tuesday with families and workers who would be affected by the cuts. Here’s more from West Virginia Public Broadcasting.

5.20.14 OCOF vigilOur Children Our Future Rally on May 20, 2014
(photo from West Virginia Public Broadcasting).

“Our democracy is working. Kids and families made their voices heard, and lawmakers from both sides of the aisle listened,” said Stephen Smith, Executive Director of the West Virginia Healthy Kids and Families Coalition. “We congratulate House and Senate leadership for finding a way to make this investment in our state’s future. Governor Tomblin has worked hard with his cabinet secretaries, law enforcement, advocates, and lawmakers to vet these programs. The research speaks for itself: we cannot afford to turn away $14 million in leveraged funds; we can’t afford to lose 80 jobs.”

Here’s more on the governor’s decision from West Virginia Metro News.

Tweaks Complete to Minimum Wage Legislation

Also while in town this week for interims, the legislature passed HB 201, which allows businesses to continue to use alternative methods of calculating overtime for eligible employees under federal law, while preserving the increase in the state’s minimum wage. HB 4283, passed during the regular session, increases the state’s minimum wage to $8.75 by 2016 for all employers in the state.

State EITC Would Make West Virginia’s Tax System More Fair

In West Virginia, as in other states, low-income workers pay a higher percentage of their wages in taxes than do high wage earners. A state Earned Income Tax Credit (EITC) would create a greater balance, giving a tax reduction to low-income workers. West Virginia should model its EITC after the federal program which has been around since 1975 and has raised millions out of poverty. Read more details in Sean’s blog post.

Nonprofit Association Provides Support for West Virginia Organizations

Do you run or work for a nonprofit organization in West Virginia? If so, membership in the West Virginia Nonprofit Association is a great resource. The WVCBP has benefited from its membership with discounted fees for seminars and valuable networking on the group’s listserv. Learn more about membership in the WVNPA here.

Reminder: Survey from Governor’s Office

If you were impacted by the January 9 chemical spill into the Elk River, now is your chance to tell Governor Tomblin how you think the state reacted to the emergency. You can still respond to this survey until Monday, May 26.

West Virginia Can Improve its Tax System with a State Earned Income Tax Credit

Most state and local tax systems are regressive, with a reliance on sales tax and relatively flat income tax brackets leading to the poor paying more of their income in state and local taxes than the wealthy. West Virginia is no different, with West Virginians who earn less than $15,000/year paying an average of 8.7% of their income in state and local taxes, while those earning above $282,000 paying only 6.3%.

UntitledSource: ITEP

But unlike West Virginia, 25 states and the District of Columbia have established State Earned Income Tax Credits (EITCs) to help alleviate the regressive nature of state and local taxes. A new report from the Institute on Taxation and Economic Policy shows just how effective a refundable state EITC would be in counteracting the regressive nature of West Virginia’s  tax code.  Depending on the size of the credit, a state EITC in West Virginia can make a big difference. For example, a 50% credit would reduce the effective tax rate on the state’s poorest workers from 8.7% to 5.2%. The average refundable state EITC is equal to 16 percent of the federal credit, but the credit percentage varies widely by state. 

1Most state EITCs are based on some percentage of the federal EITC. The federal EITC, which has been around since 1975, works by providing tax reductions to low-income workers, which both rewards work and boosts income. The federal EITC has also been wildly successful increasing workforce participation and helping 6.5 million Americans escape poverty in 2012, including 3.3 million children, and has historically enjoyed broad bipartisan support. 

The most effective state EITCs are refundable. Non-refundable EITCs like those offered in Delaware, Maine, Ohio, and Virginia are largely ineffective because they can only be used to offset income tax liability even though sales and property taxes make up the vast majority of the total state and local tax bill faced by working families. Refundable EITCs are much more effective because they work to offset all taxes paid by low-income families.

While it would cost the state revenue to enact a state EITC, it would cost far less than the proven-to-be-ineffectual business tax cuts that have been the source of the state’s recent revenue problems, and the state is currently leaving a lot of money on the table by refusing to raise the tobacco tax.

You can read the full ITEP report here.