Posted: March 10, 2016 at 3:23 pm

 

By: Corey McDonald, Kara Loyd, and Lauren McMillen

Even before the 2016 gubernatorial race begins in earnest, Senate President Bill Cole [R – Mercer] has already received substantial contributions from oil and gas interests in West Virginia. He has been endorsed by a super PAC that has so far raised $70,600 – $10,000 from oil and gas interests – and he has been backed by the West Virginia Coal Association. He has also spoken to high-end donors at an exclusive retreat organized by affiliates of the Koch brothers, two conservative billionaires who own a vast empire of oil and natural gas interests.

Cole is one of the many state politicians from both political parties who have filled their campaign war chests with money from the fossil fuel industry over the years. But this year there are some candidates running for state office without backing from the fossil fuel industry. Instead they are running on a platform of diversifying the state’s economy.

“Coal production is falling and this is a new reality that we’re faced with,” said Evan Hansen, president of an environmental consulting company in Morgantown and a candidate for the 51st district of the House of Delegates. “There’s more and more of a recognition that this is not just a cycle and what we need to do is to think of ways to expand the economy so that we have many different industries that provide jobs.”

Senate President Bill Cole is vying for election in the state's 2016 governor's race. Numbers show that Cole has already begun receiving money from oil and gas interests early on in his campaign.

Senate President Bill Cole is vying for election in the state’s 2016 governor’s race. Cole has already begun receiving money from oil and gas interests for his campaign.

Even so, candidates like Hansen are fighting an uphill battle against the status quo: the outsized influence of the fossil fuel industry on West Virginia politics via generous campaign contributions and lobbying. The vast majority of West Virginia’s lawmakers have received substantial campaign contributions from fossil fuel interests. And in this year’s race for Governor, it seems as though it will be business as usual.

“I think most people feel there is some connection between big money and politics,” says Matthew Jacobsmeier, assistant professor of political science at West Virginia University. “And in some sense we would expect that because why would people be spending all this money if they’re not getting anything out of it.”

Also running for Governor on the Democratic side is Jim Justice, a coal baron who is widely considered the richest man in West Virginia with a net worth of roughly $1.63 billion. Justice is the principal owner of Justice Energy Company Inc., which generates $8.2 million in annual revenue with mines in Wyoming and McDowell counties as well as Kentucky. Justice’s mines have a history of safety violations, and according to several news reports, he has failed to pay millions of dollars in overdue fines for those safety violations.

Booth Goodwin and Jeffrey Kessler are also running in the Democratic primary for Governor. Kessler, the Senate minority leader, has received considerable campaign contributions from the coal and natural gas industries during his 18-year tenure as a state lawmaker. Goodwin, who stepped down as the U.S. Attorney for the Southern District of West Virginia after prosecuting Donald L. Blankenship, Massey Energy Company’s former chief executive at the time of the Upper Big Branch explosions that killed 29 miners, announced his candidacy for Governor early in January. Since the first campaign finance filing deadline for 2016 is April 1, information on donations to Goodwin’s campaign is not yet available.

Cole, who will more than likely be the Republican contender, is endorsed by Accelerate West Virginia, a super PAC that has raised $70,600 from a number of businesses, including the oil and gas industry, according to a year end report of its financial receipts for 2015.  And he continues to do the oil and gas industry’s bidding. For example, he supported Senate Bill 596, which would have allowed gas company surveyors onto private property without the property owners permission in order to plan potential pipeline paths. That bill was narrowly defeated in the Senate February 29, according to the Charleston Gazette-Mail.

Cole also supported another pro-industry bill, SB 705, which would cut the current severance tax rate of 5 percent to 4 percent beginning in July 2018 and then cut it again, to 3 percent, at a time when the state already faces a $380 million budget shortfall due to severance tax shortages.

Although the Senate approved this bill, it was recently tabled by the House Finance Committee for further study. If it had passed, the state of West Virginia would have lost close to $159 million in revenues a year while local governments would lose approximately $11.6 million a year, according to a report by the WV Center on Budget and Policy.

“With our problems with the budget right now, a cut in the severance tax would blow an even bigger hole in the budget,” says Michael Plante, president of Plante Associates, a political consulting and public relations firm.

One of the bill’s sponsors, Mike Hall [R-Putnam] has received $22,150 in contributions from the mining and oil and gas industries over his 18 years in state office, while the other sponsor, Dave Sypolt [R-Preston] has received $20,600 from the industries over his 12 years in state office.

The Legislature also recently passed a bill to cut “excess” severance tax revenues that were put into place in 2005 to pay off debts related to the state’s workers’ compensation, according to a report by the Charleston Gazette-Mail. That bill was signed into law by Gov. Early Tomblin March 1, and one of its lead sponsors in the House was Rupert Phillips Jr., a lawmaker from coal-producing Logan County. Phillips, an employee of the mining industry himself, has received campaign contributions totaling $24,900 from the mining industry, close to 20 percent of his total contributions since the 2008.

Phillips and Cole are two of the many state legislators who continue to blame the coal industry’s current woes on Obama and the EPA.

“Get rid of Obama, we’ll help the coalfields.” Phillips said in a recent interview.

This graphic shows relations between coal mining employment and production within the state of West Virginia from 1989 to 2014. Employment trickled up during 2009 and has steadily been on the decline since. Yet coal production has remained fairly stable.

While coal mining employment has been on a steady decline since the late 1980s (with a brief upsurge in 2009),  coal production has remained fairly stable largely because coal companies have turned to less labor-intensive means of mining. 

In reality, there has been a consistent decline in coal jobs since the 1980s, with a brief recovery in 2006 when significant tax cuts were made to the corporate income and business franchise tax. Market analysts say that coal’s decline is largely due to market competition from cheaper natural gas and cheaper coal produced in western states like Wyoming.

While coal has been in decline for some time, state officials expected severance taxes on the growing natural gas industry in West Virginia to make up for the shortfall in taxes from coal. But the declining price of natural gas, caused by a current glut, has reduced severance tax revenues from that industry as well. West Virginia’s estimated $380 million budget shortfall can be directly attributed to the state’s overall drop in severance tax revenues.

Some analysts say the real cause of the state’s financial woes can be traced back to the significant corporate tax cuts made by then Governor Joe Manchin’s administration in 2006.

“We’ve had budget shortfalls for several years now and those can be tied directly to a series of tax cuts that we passed back in 2006 and 2007,” O’Leary said. “When you add all those tax cuts up, that’s $400-425 million a year in lost revenue and that is directly tied to our recent budget problems.”

Manchin’s financial reports during his candidacy for Governor in 2004 reveal a range of special interest contributions, including coal-related businesses and other mining interests that provided at least $100,000 of his campaign funds, according to the Associated Press.

While the state legislature was controlled by conservative “blue-dog” Democrats like Manchin for most of West Virginia’s history, Republicans have had the upper hand since 2014.

With a Republican backed legislature, Cole arguably has the advantage in the 2016 Gubernatorial race. The WV Coal Association has already endorsed Cole as their candidate for governor of West Virginia.

“Coal and natural gas interests have spent a lot of money in West Virginia and they continue to spend a lot of money,” Plante said. “I think the industry is still going to spend heavily in [future] political campaigns in order to try to get whatever edge they can.”