Governor says ‘ineffective’ tax credits haven’t saved shrinking coal industry in Virginia

Calling the measure ineffective, Virginia Gov. Terry McAuliffe (D) has vetoed Senate Bill 44, which would extend both the ability to claim and to allocate the coal employment and production incentive tax credits and the allowance of the coalfield employment enhancement tax credit “without meaningful reform.”

McAuliffe took the action March 11, saying that the measure has failed to meet its goals of slowing the decline of Virginia’s coal industry production and employment.

The Senate will attempt to override Gov. McAuliffe’s veto of SB 44, a source told GenerationHub on March 14.  The Reconvened Session (veto session) will be held April 20.

“Specifically, from 1988 until 2015, coal mine operators, electricity generators and other coal-related companies have claimed over $610 million in tax credits,” McAuliffe said of his veto decision.

“However during the same period, the number of coal miners in Virginia has declined from 11,106 to 2,946.  It would be unwise to spend additional taxpayer dollars on a tax credit that has fallen so short of its intended effectiveness,” McAuliffe said.

In January 2012, the Joint Legislative Audit and Review Commission (JLARC) published its final report, Review of the Effectiveness of Virginia Tax Preferences, Senate Document No. 4. That report evaluated the efficacy of the coal tax credits in question and found that, despite their having been created to slow the decline of coal production and employment, both declined at the same or even faster rates than were predicted before the credits were created.

JLARC’s report concluded that the economic activity had not moved in the desired direction and that the credits had not achieved their goal, the governor said.

“Given the findings of the JLARC study and the lack of meaningful reform in the face of these findings, I believe it would be unwise for me to sign this legislation,” McAuliffe said.

The GOP-dominated Virginia Senate had approved an amended version of the tax credit bill by a wide margin on Feb. 26. An article that ran in the March 11 Virginian-Pilot newspaper quoted Republican sponsors of the tax credit extension as saying that McAuliffe was vetoing the bill partly in retaliation for GOP opposition to a state Supreme Court nomination.

As governor, McAuliffe has been a supporter of renewable energy, pushing Dominion (NYSE:D) to develop more in-state solar power. He has also been supportive of the Atlantic Coast Pipeline for natural gas.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at