Charleston (WV) Daily Mail: Cap-and-trade Scenario Dire for Jobs

By George Hohmann
Daily Mail Business Editor
 
WHITE SULPHUR SPRINGS - The Waxman-Markey cap-and-trade energy bill pending in Congress could cost West Virginia 38,500 jobs, West Virginia University economist Tom Witt said.

Simple scenarios using the university's economic modeling software indicate that if the Waxman-Markey bill became law, by 2030 the state would experience a 1.4 percent decline in population, lose 38,500 jobs, and the gross state product would be 4.5 percent lower than it would have been without the legislation, Witt said.

"This year there is a $7,000 gap between the average per capita personal income in West Virginia and the United States," he said. "With Waxman-Markey, by 2030 the gap will be $9,000. Today we take pride in the fact that we rank 47th or 48th in per capita income, not 50th. I think it's almost a guarantee that by 2030, in terms of the implications in this bill, we would be last in this country."

A study commissioned earlier this summer by the National Association of Manufacturers predicted passage of the cap-and-trade bill would cost West Virginia between 8,200 and 11,100 jobs by 2030.

The legislation also would increase the amount that low-income families in West Virginia spend on energy from 17.2 percent of their income to between 19.3 percent and 20.2 percent by 2030, that study said.

Witt said it's impossible to be precise about the bill's impact because no one knows its final form. The bill passed the U.S. House of Representatives on June 26. The Senate is expected to take up a similar measure later this year.

Witt is director of the Bureau of Business and Economic Research at West Virginia University. He and Cal Kent, vice president of Business and Economic Research at Marshall University, spoke Friday at the West Virginia Chamber of Commerce's Business Summit at The Greenbrier Resort.

Kent said, "No product in West Virginia is more highly taxed than coal. By a conservative estimate, every ton of coal mined carries $5.75 worth of tax."

The coal severance tax raises $335 million annually and accounts for 8 percent of the state government's general revenue, Kent said. The corporate net income tax raises $401 million. Coal property taxes raise $105 million that go annually to local governments and schools. A special reclamation tax accounts for $17 million and the coal resource transportation road fund accounts for $4 million. That's $862 million.

"Add in other fees, including the personal income taxes paid by those who work in the coal industry, and you have over $1 billion coming to state and local government from this one industry alone," Kent said. "Coal revenue is absolutely vital for the continued prosperity of state and local government in this state."

Witt and Kent are collaborating on what Witt called "a very definitive study of the economic contributions of the coal industry in West Virginia." Friday's
presentation was designed to "give you a hint of some of the results," he said.

Steve Eule, vice president for climate and technology at the U.S. Chamber of Commerce's Institute for 21st Century Energy, said whoever gets to frame the debate over the Waxman-Markey bill will win.

If advocates succeed in convincing the public that the legislation will create green jobs, provide energy security and cost nothing more than the equivalent of a postage stamp a day, they will win, he said. But if opponents convince the public it is a job-killing industry tax that will ship thousands of jobs overseas, it will not pass.

"That's the battleground - how this bill is going to be portrayed," Eule said.

Gene Kitts, senior vice president of mining services at International Coal Group, said the coal industry is under attack by the U.S. Environmental Protection Agency.

"We have an EPA that is essentially waging war on this industry and they're not backing off," he said.

If the EPA is successful in its regulatory attempts, "the impact is going to come much harder and quicker than climate-change legislation. And we don't get to vote on it."

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