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State economy growing, but slowly

by Martha Bryson Hodel

THE ASSOCIATED PRESS

CHARLESTON -- If you don't count the coal industry, West Virginia's economy is making real progress in job growth and rising personal income.

The coal industry, however, is still big business in West Virginia, and that business is hurting.

In the past year, the number of West Virginia mining jobs has dropped nearly 12 percent, coal prices fell worldwide, and the volume of U.S. coal exported to other countries -- a big sector of West Virginia's market -- is down at least 6 percent.

Yet overall, the state's economy is improving, according to a biennial "economic outlook" report released Monday by the West Virginia University Bureau of Business and Economic Research.

"We're adding jobs; our inflation-adjusted, per-capita personal income is rising, and unemployment is stable at nearly 20-year lows," said George Hammond, an assistant professor in WVU's College of Business and Economics.

Hammond is the author of WVU's biennial economic outlook report, a summary of the state's economic progress of the past 10 years and a forecast of what is likely to come in the next 10.

Since 1989, West Virginia's economy has added an average of 11,100 jobs per year.

But in 1999 the state lost 2,200 coal mining jobs, an 11.7 percent decline from 1998, as well as another 1,000 or so jobs that were lost in primary metals.

"It was a bad year for coal mining," Hammond said.

Gov. Cecil Underwood agrees.

The state ended the fiscal year last week with a $10.9 million surplus, but Underwood said the state would have been $25 million in the red if he hadn't imposed a 3 percent spending cut in January.

Underwood ordered the cuts after a federal judge ruled that some large-scale strip mining practices allowed by the state are illegal under federal law.

The public uproar that followed, including Underwood's spending freeze, prompted the judge to postpone implementation of his own ruling pending the state's appeal to the 4th U.S. Circuit Court of Appeals in Richmond, Va.

State revenues declined anyway, Underwood said.

"That answers the critics who say I overreacted to the impact of the mountaintop mining (dispute) on revenues," Underwood said in an interview with The Associated Press.

Although revenues from the state's personal income tax were more than $25.5 million over estimates for the year, business and occupation taxes were $9.7 million less than the state's estimate of $177.7 million.

The state's corporate net income tax revenues were down $35.9 million from estimates of $153 million, and coal severance taxes came in $12.8 million short of the state's $161.5 million estimate.

Given that situation, Underwood said, continuing the 3 percent spending cut is necessary "until we know what's going to happen with the mountaintop mining issue."

"We think ... (it) could be resolved by next year," Underwood said. "But if it isn't, the impact could get progressively worse."

The increase in personal income tax revenues, Underwood said, is evidence that, "we're in the best position we have ever been to diversify our economy. But we can't throw away that (coal industry) segment of our economy and income. It just creates too big a hole."

While some of the coal industry's problems are unique to West Virginia, like the dispute over whether West Virginia is adhering to federal mining laws, United Mine Workers President Cecil Roberts says the mining industry nationwide has problems.

Foreign demand for U.S. coal has declined sharply in the past year, by as much as 20 million tons. West Virginia historically has supplied about half of all coal exported from the United States.

New air quality standards that took effect Jan. 1, 2000, have shifted coal demand away from Appalachia and toward the low-sulfur coalfields of the Powder River Basin in Wyoming.

And finally, the country experienced a relatively mild winter in 1999-2000, reducing domestic demand for coal for electricity.

Coal stockpiles are growing while jobs are dwindling, Roberts said.

"I can't begin to tell you how much coal is out there lying on the ground, but there's a lot," he said.

Roberts, a West Virginia native, is skeptical of the WVU data that indicates growth in state jobs and personal income over the past few years.

"We can't export coal and we've quit making steel," Roberts said. "We've lost population; our childbirth rate is lower than our death rate. and now we're the oldest state in the nation. ...

"It doesn't escape me that many people have a job. Almost everybody in the country that wants a job has one, but the quality of those jobs and the amount they pay is something that concerns the labor movement.

"If 90 percent of the people that could hold a job have left the state, and you only look at the 10 percent that's left, everybody probably is OK," Roberts concluded.

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