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Pair of economic reports speak to the value of diversification

September 6, 2018

Some mixed messages about West Virginia’s economy emerged in the past week, one carrying a positive note and the other trending toward the negative.

The disparate signals might suggest that some parts of the state are faring better than others in improving people’s economic lots, meaning that the state still has a lot of work to do for broader economic growth.

From a statewide perspective, the good news coming out of Charleston this week from Gov. Jim Justice was that the state government’s August revenue collections totaled $33 million above estimates. That means the state’s budget year, which began July 1, is off to a good start. In July, revenues came in similarly high, or more than $32 million over projections.

The bulk of the gains were attributed to personal income tax collections, sales tax collections and severance taxes. All are indicators of more economic activity — more income, more spending and more activity and better prices for key industries such as coal and natural gas.

Also, keep in mind that the state has embarked on a nearly $3 billion road, highway and bridge improvement program that should be yielding more economic activity in the years ahead.

On the flip side, however, is word from the Appalachian Regional Commission that this year it has designated three more counties in West Virginia as distressed, joining 12 other counties in the state that already had been so labeled. In addition, five other counties were downgraded by the commission from transitional status to its at-risk level, the second worst estimation of a county’s economic health.

The downward trend runs counter to what’s happening overall in the multistate region, according to ARC, an economic development agency which provides grants and project support in the region. “I think what’s happening is the data is catching up with the reality of the situation,” Wendy Wasserman, the ARC’s communications director, told the Charleston Gazette-Mail.

She suggested that West Virginia’s dependence on a coal industry that has declined over the past decade has played a role. There’s truth to that, although state officials this week noted an uptick in coal production, including from the hard-hit southern part of the state.

Perhaps part of the divergent perspectives has to do with a lag in the data used by ARC to make its designations. Most of that information — factors such as unemployment and poverty rates — are no more recent than 2016, meaning the ARC’s ratings may not be 100 percent reflective of what’s happening now. But it’s well-known that many counties are struggling far more than others.

What both the governor and ARC agree on, though, is that West Virginia must work to develop other industries. “I think this is just another reason and another tipping point for West Virginia communities to diversify their economy,” Wasserman said. In his news conference this week, the governor had this to say: “We are a natural resource state. We don’t want to just throw that away. But we need to be diversified.”

Both state government and ARC officials should keep that common goal as a guiding light as they strive to foster more economic growth.

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