In early June, California Gov. Arnold Schwarzenegger spoke at the United Nations World Environment Day conference in San Francisco and announced he had issued an Executive Order requiring the virtual elimination of greenhouse gases (GHG) in California by 2050. As California is the world’s 7th largest economy, the most populous American state, and the national trendsetter in all behaviors social, coal-producing states like West Virginia need to take his decree seriously. If California follows through on his GHG reduction plan, then we will have, on a de facto basis, ratified the Kyoto Treaty.
Oh Arnold! Must we all pay an imaginary piper because your in-laws have made you feel guilty for burning tons of napalm on your way to becoming a Hollywood millionaire?
Also flying across the radar screen is the resurgence of nuclear power. The Green religion considers GHG the equivalent of 666 in Revelations. And to exorcise GHG, the Greens have become blind, deaf, and dumb monks whenever the topic of nuclear power is debated. Talk about an unholy alliance against coal!
The facts of burning coal are simple but no scientist is prescient enough to draw conclusions about atmospheric warming from them. When you burn coal, you get lots of carbon dioxide. The trees can reprocess part of the CO2, but only seasonally. The oceans can absorb CO2, but at a fixed rate. Coal gasification strips CO2 ahead of the smokestack, but the CO2 gas must be liquefied and pumped underground at great pressure. CO2 that cannot be reprocessed or stored goes into the atmosphere and, so the theory goes, causes the greenhouse effect.
Regardless of your position or thoughts on GHG and global warming, we are not far from the era when pollution credits are auctioned to competing industries. The government will determine hypothetical annual limits for GHG’s, and fossil-fuel-burning industries will have to pay large sums for the rights to discharge GHG’s.
Pollution credits are not scientific. Instead, they represent the political solution for a problem that has far too many variables for humankind to solve. Count the votes in Congress of the coal-producing states and compare that total to the votes of the non-coal states. West Virginia loses any contest in which "Congress felt it had to take action on global warming!"
In one respect, pollution credits will, for the first time, place an economic cost on air pollution. Prior to this approach, only the cost of abatement equipment has factored into the equation. It’s one thing to determine the price of a car’s catalytic converter but quite another to anticipate the auction bids of American Electric Power and Allegheny Power for credits to generate one million megawatt-hours of electricity. We won’t know the cost of GHG credits until we see it priced at the meter. On the bright side, the air pollution taxes that we’ll eventually pay should restore solvency to Social Security.
A few days after Gov. Schwarzenegger made his mid-century predictions, officials at the National Coal Show in Pittsburgh gave their assessment of 2050. The coal industry predicts an increase in coal usage overall as well as a small increase in market share for coal-fired electric generation. Either each party is mostly wrong in its forecast or one of them is totally wrong. These two predicted outcomes, zero emissions and business as usual, cannot mesh as stated.
Next to electric power generation, coal’s other big market is steelmaking. The industry has far too much capacity in basic steelmaking because there is so much scrap steel being recycled. There is so much scrap steel lying around now that some experts predict that an equilibrium point is near and only a small amount of new steel will be needed annually in the future. Recycling uses far less energy and produces less GHG than does making steel from scratch.
Coal demand has its boom and bust cycles. If the nation takes a hard left turn off the King Coal Highway, as recently evidenced by California’s pace car, then we must ask ourselves: Is the current coal boom the last one ever? Is it the next to last?
We would do well to consider California’s actions when predicting coal’s future and its impact on West Virginia’s economy. It is more likely that the Left Coast of America decides our energy future than will our optimistic friends who attended this year’s National Coal Show.
Friday, July 1, 2005
Friday, June 17, 2005
Let's Take Stock of Our Various Addictions
One of the best things happening in West Virginia is the reporting by West Virginia Media’s I-Team. I can say that because a.) I am a news junkie and analyze the news, and b.) The State Journal pays me not a cent for my opinion. This is not a paid endorsement for West Virginia Media.
In the past months, the I-Team has presented in-depth investigations about drug and gambling addiction. I was most surprised to learn of the extent of Methadone use across the state. Even by charging addicts about $11 per day, state-sanctioned Methadone clinics are very profitable.
The number of Methadone addicts is particularly telling as they are not part of the underground market. They have chosen Methadone primarily to try to escape their addiction to prescription painkillers. With this level of what can be called "legitimate addiction", what can we deduce about the underground market for narcotics?
That question is best answered by another I-Team report that revealed "meth" labs are busted daily. Crystal methamphetamine is an entrepreneur’s dream-the cost of capital and raw materials are remarkably cheap. The moonshiners of old didn’t have it this good-they needed corn which meant an investment in land. If a Methadone clinic, with its investment in a facility, its taxable status, and burdensome paperwork requirements, is very profitable, then meth lab chemists must be raking it in.
Gambling has always thrived in our state. But the nature of gambling has changed dramatically since the voters approved the lottery in 1984. All one needs to do is review the growth in personal bankruptcies resultant from gambling to understand this change. Though not reported in this light, the ever-increasing arrests for embezzlement around the state often are the result of the bookkeeper’s drug or gambling habits.
There are moral issues with addiction. There is also the undeniable charge that state government is culpable in many ways for these addictions. Workers Comp was the leading purveyor of Oxycontin until it changed rules last year. And as for gambling, politicians are the true addicts. But as Professor G. H. Dorr once noted during an endless dialogue, "And what, to flog a horse that if not at this point dead is in mortal danger of expiring," is the point of this column? Economic impact is.
It has always been difficult for economists to value the underground economy. However, since a state-owned computer now tracks nearly every gambling transaction taking place in West Virginia, we have a good data source to calculate the total dollars that West Virginians bet. Using a myriad of other clues, such as drug bust results and Methadone sales, we can also better estimate the amount of cash leaving people’s wallets to pay for illegal drugs.
I would suggest that $1 billion per year is a good starting point in estimating drug and gambling addiction spending.
In our current situation, the multiplier effect of this spending is minimal at best. Though gambling money balances the state budget, let’s examine what it buys. Our brand new jails and prisons are overfilled. The courts are clogged with drug cases. A certain portion of Medicaid and welfare benefits is spent helping addicts to either pursue or recover from their addictions. In all, the state’s legally-derived gambling revenue doesn’t offset the direct economic cost of drug and gambling addiction let alone provide for economic growth.
On the other hand, look at the effect that spending $1 billion per year on new housing would have. Or spend it on new cars. Or spend that rich sum at WalMart, Target, and Best Buy. Then you would have job creation and a multiplier effect as high as 6:1. The taxes levied on this new business growth alone might exceed the state’s current gambling take. Plus, the economy would continue to grow year by year and we would not have to be 49th again (and again.)
If West Virginia hopes to have any kind of economic turnaround at all, drug and gambling addiction have to be all but eliminated. Moving Sudafed to different shelves and voting down table games won’t solve the dilemma. It will take political outrage, the kind currently directed at the Pentagon over 8 aircraft, to make even a dent in the situation.
In a year or two, or perhaps even three, offshore Internet gambling will likely obliterate state gambling franchises. In its greed to raise taxes, the state has conditioned its citizenry to gamble via the video terminal. Someday soon, our gamblers will realize that Cyberspace pays better odds and the state will learn the true cost of its gambling addiction.
Stay tuned to the I-Team for that report.
Professor G. H. Dorr is the character played by Tom Hanks in "Ladykillers".
In the past months, the I-Team has presented in-depth investigations about drug and gambling addiction. I was most surprised to learn of the extent of Methadone use across the state. Even by charging addicts about $11 per day, state-sanctioned Methadone clinics are very profitable.
The number of Methadone addicts is particularly telling as they are not part of the underground market. They have chosen Methadone primarily to try to escape their addiction to prescription painkillers. With this level of what can be called "legitimate addiction", what can we deduce about the underground market for narcotics?
That question is best answered by another I-Team report that revealed "meth" labs are busted daily. Crystal methamphetamine is an entrepreneur’s dream-the cost of capital and raw materials are remarkably cheap. The moonshiners of old didn’t have it this good-they needed corn which meant an investment in land. If a Methadone clinic, with its investment in a facility, its taxable status, and burdensome paperwork requirements, is very profitable, then meth lab chemists must be raking it in.
Gambling has always thrived in our state. But the nature of gambling has changed dramatically since the voters approved the lottery in 1984. All one needs to do is review the growth in personal bankruptcies resultant from gambling to understand this change. Though not reported in this light, the ever-increasing arrests for embezzlement around the state often are the result of the bookkeeper’s drug or gambling habits.
There are moral issues with addiction. There is also the undeniable charge that state government is culpable in many ways for these addictions. Workers Comp was the leading purveyor of Oxycontin until it changed rules last year. And as for gambling, politicians are the true addicts. But as Professor G. H. Dorr once noted during an endless dialogue, "And what, to flog a horse that if not at this point dead is in mortal danger of expiring," is the point of this column? Economic impact is.
It has always been difficult for economists to value the underground economy. However, since a state-owned computer now tracks nearly every gambling transaction taking place in West Virginia, we have a good data source to calculate the total dollars that West Virginians bet. Using a myriad of other clues, such as drug bust results and Methadone sales, we can also better estimate the amount of cash leaving people’s wallets to pay for illegal drugs.
I would suggest that $1 billion per year is a good starting point in estimating drug and gambling addiction spending.
In our current situation, the multiplier effect of this spending is minimal at best. Though gambling money balances the state budget, let’s examine what it buys. Our brand new jails and prisons are overfilled. The courts are clogged with drug cases. A certain portion of Medicaid and welfare benefits is spent helping addicts to either pursue or recover from their addictions. In all, the state’s legally-derived gambling revenue doesn’t offset the direct economic cost of drug and gambling addiction let alone provide for economic growth.
On the other hand, look at the effect that spending $1 billion per year on new housing would have. Or spend it on new cars. Or spend that rich sum at WalMart, Target, and Best Buy. Then you would have job creation and a multiplier effect as high as 6:1. The taxes levied on this new business growth alone might exceed the state’s current gambling take. Plus, the economy would continue to grow year by year and we would not have to be 49th again (and again.)
If West Virginia hopes to have any kind of economic turnaround at all, drug and gambling addiction have to be all but eliminated. Moving Sudafed to different shelves and voting down table games won’t solve the dilemma. It will take political outrage, the kind currently directed at the Pentagon over 8 aircraft, to make even a dent in the situation.
In a year or two, or perhaps even three, offshore Internet gambling will likely obliterate state gambling franchises. In its greed to raise taxes, the state has conditioned its citizenry to gamble via the video terminal. Someday soon, our gamblers will realize that Cyberspace pays better odds and the state will learn the true cost of its gambling addiction.
Stay tuned to the I-Team for that report.
Professor G. H. Dorr is the character played by Tom Hanks in "Ladykillers".
Friday, April 29, 2005
Hillary Actually Meant To Say, "… THE Village"
Can we even imagine the excitement that Hillary Rodham felt when she made her first contact with Eleanor Roosevelt? Our cute little First-Lady-To-Be, that darling blonde wonder from the Chicago suburbs, that dreamer of building villages must have shivered with joy when the Grande Dame of Hyde Park appeared in her bedroom on that dark and stormy night!
This was Hillary’s chance to learn of such phenomena as immortality and the magic of transforming a doll house into a living, breathing community. Little Hillary was raised in a Republican household and she had tired of lifeless, conservative-minded, rag dolls. If only she could learn how to cast Eleanor’s magic spell, then Hillary knew she could make her dollhouse come to life.
So fanciful was she of her hoped-for séance with Eleanor that little Hillary wrote in her diary of her belief in immortality (although one transcription service derived the word as "immorality.") Though raised in a conservative household that disdained communicating with dead liberals, Hillary’s parents nonetheless allowed her flights of fancy. Hillary recalled how her mother had told her, "You were named after Sir Edmund Hillary, the conqueror of Mt. Everest!" That Tenzing Norgay dragged Edmund Hillary uphill for six miles in 1953 made no difference to the blonde child born in 1947. She took her given name, and her given immor[t]ality, to heart.
Eleanor had transformed her dollhouse into many villages during her physical life. But Arthurdale, the West Virginia commune, was the Grand Dame’s most magical village of all. And that night in Hillary’s bedroom, Eleanor revealed the secret that made it so.
"You have to find a way to be the First Lady; even if that means marrying your cousin!" Eleanor beamed. "With that position, you wield the power of the federal purse-a power so great that the down-and-out’s will move into your village."
But Hillary yearned for more than mere fealty from her subjects. She had read enough fairy tales by then to know that the peasants obeyed the king but always loved their princess. So she inquired of the matronly spirit, "How would I make the villagers love me?"
"That’s the least of your worries, child." Eleanor bespoke. "Give them government checks, and they’ll do the rest."
As you know, Hillary (Norgay, in Nepalese) Rodham grew up to be a First Lady. But in a subsequent séance in 1993, Eleanor Roosevelt advised her thusly: "Why don’t you just write up your village plan for now. Then you can get yourself elected president and turn the whole continent into a village!"
It was a no-brainer and Hillary soon after hired a ghostwriter.
Well, she should have waited a few years in my opinion. She should have hired M. Night Shyamalan, the writer/director of "The Village." If you have seen the movie, then you’d know that Hillary would never have mentioned the "vast, right-wing conspiracy." No, she would have referred to the vast, right-wing conspiracy as "Those we do not speak of."
At the outset, The Village appears to be a nineteenth century haven in rural Pennsylvania. There are no telephones, no electric poles, and no running water. In short, it’s the perfect village plan for the blonde executive who doesn’t want to be bothered with trifling complications like infrastructure. The denizens of The Village are not consumed by questions like: "Does water run uphill or downhill?"
As perfect as it is, The Village does have a one ghastly drawback-the neighbors. Ogres live in the woods surrounding the enclave and venturing into the woods means certain death. As evil and ugly as the ogres are, they still serve the idyllic hamlet with a needed purpose. True evil lives in "the towns" that lie beyond the forest and the ogre-patrolled forest keeps the evil of the towns at bay. Utopia, we learn, does come with a price-learnéd ignorance.
The Villagers are not living in the nineteenth century as we initially believe. They are modern-day denizens who have sought to escape the forces of Darwin that wreak havoc on Philadelphia. Each villager has a tale of horror and their elder, played convincingly by William Hurt, has engineered their retreat from society. His village is not financed by Uncle Sam but by the next best thing-inheritance of his father’s billions.
The movie’s ending is intriguing. "The Village" does indeed have a village idiot, Noah, who stabs his friend, Lucius, in a jealous rage. To save Lucius’ life, his blind fiancé volunteers to enter the woods and travel to the towns to procure medicine. As she stumbles through the forest, Noah attacks her but he is killed in a fall.
William Hurt then immortalizes Noah. He forgives Noah of his murderous attempts and declares that Noah’s masquerade as an ogre has given realism to "Those we do not speak of." He tells the other elders that Noah’s acts will allow The Villagers to continue on with their isolation and beliefs.
Imagine that-giving a full pardon to the evildoer in the closing moments of the drama. I wonder where M. Night Shyamalan got that idea?
This was Hillary’s chance to learn of such phenomena as immortality and the magic of transforming a doll house into a living, breathing community. Little Hillary was raised in a Republican household and she had tired of lifeless, conservative-minded, rag dolls. If only she could learn how to cast Eleanor’s magic spell, then Hillary knew she could make her dollhouse come to life.
So fanciful was she of her hoped-for séance with Eleanor that little Hillary wrote in her diary of her belief in immortality (although one transcription service derived the word as "immorality.") Though raised in a conservative household that disdained communicating with dead liberals, Hillary’s parents nonetheless allowed her flights of fancy. Hillary recalled how her mother had told her, "You were named after Sir Edmund Hillary, the conqueror of Mt. Everest!" That Tenzing Norgay dragged Edmund Hillary uphill for six miles in 1953 made no difference to the blonde child born in 1947. She took her given name, and her given immor[t]ality, to heart.
Eleanor had transformed her dollhouse into many villages during her physical life. But Arthurdale, the West Virginia commune, was the Grand Dame’s most magical village of all. And that night in Hillary’s bedroom, Eleanor revealed the secret that made it so.
"You have to find a way to be the First Lady; even if that means marrying your cousin!" Eleanor beamed. "With that position, you wield the power of the federal purse-a power so great that the down-and-out’s will move into your village."
But Hillary yearned for more than mere fealty from her subjects. She had read enough fairy tales by then to know that the peasants obeyed the king but always loved their princess. So she inquired of the matronly spirit, "How would I make the villagers love me?"
"That’s the least of your worries, child." Eleanor bespoke. "Give them government checks, and they’ll do the rest."
As you know, Hillary (Norgay, in Nepalese) Rodham grew up to be a First Lady. But in a subsequent séance in 1993, Eleanor Roosevelt advised her thusly: "Why don’t you just write up your village plan for now. Then you can get yourself elected president and turn the whole continent into a village!"
It was a no-brainer and Hillary soon after hired a ghostwriter.
Well, she should have waited a few years in my opinion. She should have hired M. Night Shyamalan, the writer/director of "The Village." If you have seen the movie, then you’d know that Hillary would never have mentioned the "vast, right-wing conspiracy." No, she would have referred to the vast, right-wing conspiracy as "Those we do not speak of."
At the outset, The Village appears to be a nineteenth century haven in rural Pennsylvania. There are no telephones, no electric poles, and no running water. In short, it’s the perfect village plan for the blonde executive who doesn’t want to be bothered with trifling complications like infrastructure. The denizens of The Village are not consumed by questions like: "Does water run uphill or downhill?"
As perfect as it is, The Village does have a one ghastly drawback-the neighbors. Ogres live in the woods surrounding the enclave and venturing into the woods means certain death. As evil and ugly as the ogres are, they still serve the idyllic hamlet with a needed purpose. True evil lives in "the towns" that lie beyond the forest and the ogre-patrolled forest keeps the evil of the towns at bay. Utopia, we learn, does come with a price-learnéd ignorance.
The Villagers are not living in the nineteenth century as we initially believe. They are modern-day denizens who have sought to escape the forces of Darwin that wreak havoc on Philadelphia. Each villager has a tale of horror and their elder, played convincingly by William Hurt, has engineered their retreat from society. His village is not financed by Uncle Sam but by the next best thing-inheritance of his father’s billions.
The movie’s ending is intriguing. "The Village" does indeed have a village idiot, Noah, who stabs his friend, Lucius, in a jealous rage. To save Lucius’ life, his blind fiancé volunteers to enter the woods and travel to the towns to procure medicine. As she stumbles through the forest, Noah attacks her but he is killed in a fall.
William Hurt then immortalizes Noah. He forgives Noah of his murderous attempts and declares that Noah’s masquerade as an ogre has given realism to "Those we do not speak of." He tells the other elders that Noah’s acts will allow The Villagers to continue on with their isolation and beliefs.
Imagine that-giving a full pardon to the evildoer in the closing moments of the drama. I wonder where M. Night Shyamalan got that idea?
Friday, April 1, 2005
Running Government As A Business
Bob Graham, Executive Director of the Wyoming County Council on Aging, made headlines last year when his lucrative compensation package was revealed. The snorts of moral indignation could be heard everywhere and echoes are still bouncing off the hills. And the question still being asked is how could Bob Graham earn nearly $500,000 in a poor little place like Wyoming County ?
The answer to that question is simple-he had an employment contract. It was spelled out-in English.
What is amazing, to me at least, is that Bob Graham could manage all of the programs under his control with such economy that he could pay himself in Enron dollars instead of West Virginia dollars. From what I have read, Mr. Graham earned $460,000 in 2003 and the agencies under his control took in combined revenues of $5.3 million. His compensation package, then, was close to 9% of gross revenue. $4.3 million of that revenue came from Medicaid. Yet we repeatedly hear from health care experts that Medicaid reimbursements don’t cover the cost of service. Go figure.
Wyoming County ’s revelation leads me to believe that there are some significant efficiencies yet to be discovered in running senior centers and home health programs. Even if Mr. Graham had been paid $100,000, then that still leaves almost 7% of gross revenue which could have been shaved from the budget. Applying a 7% reduction to senior programs in all 55 counties would certainly add up to a big savings. And our seniors in the other 54 counties would be able to lounge in hot tubs just like Wyoming County seniors do!
If I were dictator of this state, I’d hire Bob Graham as a consultant. He can milk cows better than the Amish. (As talented as he is, though, he should not have milked sacred cows outside of Hindu territory.)
I’d pay Bombay Bob $1 million a year and give him 20% of all the money he’d save the state during years one and two of his contract. I’d bet that he could save the taxpayers tenfold or more over what he charged.
As your dictator, I’d also consider hiring former Randolph County Clerk Rose Lloyd as a consultant. Ms. Lloyd recently resigned her office over accounting irregularities. She’s agreed to make restitution to the county in the amount of $48,000 over five years.
Given her years of experience in county government, I think Ms. Lloyd could make a valuable investigator with the State Tax Department. Ms. Lloyd would not be relegated to adding columns of numbers. Her contribution would be in recommending tighter financial and accounting controls. She knows how the system works and where the weaknesses are. In that regard, her experience, although tainted, is invaluable.
What I have just suggested might sound like heresy. It is. But on Scout’s honor, I promise that I would be a benevolent dictator!
All kidding aside, the rerouting of public money by Mr. Graham and Ms. Lloyd is nothing new. These two culprits just happen to be the names in the news right now.
Government financial systems are ripe for finagling. Across the state, there are thousands upon thousands of accounts and funds which receive and disburse tax money and few of them ever get as much as a cursory audit. Using the case of the Randolph County Clerk’s office as an example, the state’s auditor discovered some $13,000 missing over a three-month period. The $48,000 settlement to which Ms. Lloyd agreed was a number pulled out of thin air. Auditors have not thoroughly examined Randolph County financial records to determine the actual embezzlement. For all we know, ten million dollars could be missing.
Each government grant is supposed to be accounted for as well. But as we recently learned in Hampshire County, education grant money was misdirected-deliberately, no less.
Gov. Joe Manchin has taken the first step toward improving financial accounting in West Virginia. He deserves a commendation for his initiatives to modernize the State Tax Department’s computer system. But this first step, as big as it is, is not going to solve all of the problems.
Whether it’s county governments, boards of education, councils on aging, or the myriad of other entities that receive and spend taxpayer money, the state needs to rein in their ability to operate as personal fiefdoms. Giving a checkbook to every Tom, Dick, and Boss Hogg is what causes these problems in the first place.
Gov. Manchin is doing his best to apply good business practices to running state government. That said, we should consider requiring each and every government spending unit to provide us, the shareholders, with audited financial statements. And along the lines of the Sarbanes-Oxley Act, we should get serious about holding the chefs who cook the books liable for their acts.
The answer to that question is simple-he had an employment contract. It was spelled out-in English.
What is amazing, to me at least, is that Bob Graham could manage all of the programs under his control with such economy that he could pay himself in Enron dollars instead of West Virginia dollars. From what I have read, Mr. Graham earned $460,000 in 2003 and the agencies under his control took in combined revenues of $5.3 million. His compensation package, then, was close to 9% of gross revenue. $4.3 million of that revenue came from Medicaid. Yet we repeatedly hear from health care experts that Medicaid reimbursements don’t cover the cost of service. Go figure.
Wyoming County ’s revelation leads me to believe that there are some significant efficiencies yet to be discovered in running senior centers and home health programs. Even if Mr. Graham had been paid $100,000, then that still leaves almost 7% of gross revenue which could have been shaved from the budget. Applying a 7% reduction to senior programs in all 55 counties would certainly add up to a big savings. And our seniors in the other 54 counties would be able to lounge in hot tubs just like Wyoming County seniors do!
If I were dictator of this state, I’d hire Bob Graham as a consultant. He can milk cows better than the Amish. (As talented as he is, though, he should not have milked sacred cows outside of Hindu territory.)
I’d pay Bombay Bob $1 million a year and give him 20% of all the money he’d save the state during years one and two of his contract. I’d bet that he could save the taxpayers tenfold or more over what he charged.
As your dictator, I’d also consider hiring former Randolph County Clerk Rose Lloyd as a consultant. Ms. Lloyd recently resigned her office over accounting irregularities. She’s agreed to make restitution to the county in the amount of $48,000 over five years.
Given her years of experience in county government, I think Ms. Lloyd could make a valuable investigator with the State Tax Department. Ms. Lloyd would not be relegated to adding columns of numbers. Her contribution would be in recommending tighter financial and accounting controls. She knows how the system works and where the weaknesses are. In that regard, her experience, although tainted, is invaluable.
What I have just suggested might sound like heresy. It is. But on Scout’s honor, I promise that I would be a benevolent dictator!
All kidding aside, the rerouting of public money by Mr. Graham and Ms. Lloyd is nothing new. These two culprits just happen to be the names in the news right now.
Government financial systems are ripe for finagling. Across the state, there are thousands upon thousands of accounts and funds which receive and disburse tax money and few of them ever get as much as a cursory audit. Using the case of the Randolph County Clerk’s office as an example, the state’s auditor discovered some $13,000 missing over a three-month period. The $48,000 settlement to which Ms. Lloyd agreed was a number pulled out of thin air. Auditors have not thoroughly examined Randolph County financial records to determine the actual embezzlement. For all we know, ten million dollars could be missing.
Each government grant is supposed to be accounted for as well. But as we recently learned in Hampshire County, education grant money was misdirected-deliberately, no less.
Gov. Joe Manchin has taken the first step toward improving financial accounting in West Virginia. He deserves a commendation for his initiatives to modernize the State Tax Department’s computer system. But this first step, as big as it is, is not going to solve all of the problems.
Whether it’s county governments, boards of education, councils on aging, or the myriad of other entities that receive and spend taxpayer money, the state needs to rein in their ability to operate as personal fiefdoms. Giving a checkbook to every Tom, Dick, and Boss Hogg is what causes these problems in the first place.
Gov. Manchin is doing his best to apply good business practices to running state government. That said, we should consider requiring each and every government spending unit to provide us, the shareholders, with audited financial statements. And along the lines of the Sarbanes-Oxley Act, we should get serious about holding the chefs who cook the books liable for their acts.
Friday, March 4, 2005
Bait Shop Owners Find Nemo! Collect Reward Money.
The thing I like most about the State Journal is its spotlight on small business. No other West Virginia publication dedicates itself to celebrating successful entrepreneurs quite like this newspaper does. I wish we had more of these stories to read.
In American society, small businesses play an important role in two critical areas-the creation of wealth and preservation of democracy. Yet the political class in our state has ignored these distinctions ever since New Deal theology became their official religion. For seven decades now, the New Dealers have been the uncontested ruling party and it is not surprising that small businesses are a small part of our economy. In West Virginia, growing an ever-bigger government (and increasingly, enshrining monopolies or oligopolies) has been promoted as our only opportunity to achieve prosperity.
West Virginia has gone out of its way to stifle small business development. To illustrate this point, let me relate that I know of two area businesses that closed their shops for the same reason-Wal-Mart was selling these shops’ most popular items at prices less than the shops could buy them at wholesale.
Ordinarily, one could fall back on the argument that Wal-Mart is an efficient behemoth that understands retail better than anyone else to explain the demise of their small competitors. But that argument fails in this case, at least in part, because the City of Clarksburg reportedly offered Wal-Mart $6-8 million in tax abatements to locate there. For a period of time, the city also stationed a police detachment inside of the Super Wal-Mart store. To my knowledge, the actual total cost of these subsidies has not been made public.
As Marlin asks in "Finding Nemo": With friends like these, who needs anemones?
As surprising as this may sound, the City of Clarksburg is not at fault in this instance. West Virginia’s antiquated tax code is. Clarksburg had no choice but to enter a bidding war for the Super Wal-Mart lest one of four neighboring incorporated towns reel it in. And if it’s not Wal-Mart, it’s another big project. For the past three decades, Clarksburg has survived financially only because of the business and occupation taxes collected on construction of new stores and government buildings.
A perfect example of this frenzy is the F. B. I. facility, better known in these parts as the Fingerprint Factory because it was touted as an economic development project. Clarksburg fought hard to ‘shoestring’ annex the faraway Fingerprint Factory because of the revenue that the construction taxes would bring in. In the long run, the federal facility is a tax-loser for the city. Its annexation has increased sprawl. And sprawl all but guarantees that dead zones, such as the old business district, stay dead. Clarksburg, however, has no choice but to live for the short term and find the quick tax fix.
Until such time as state government allows cities the right to draft a modern tax code, we will continue on this destructive path. Our cities and counties also need to merge governments. If for no other reason, it will prevent them from cannibalizing one another in order to tax the next Wal-Mart or Fingerprint Factory.
In looking forward, small business development should be the state’s top priority when making any of these changes. A good example of what to do and what not to do can be learned from the Cabela’s case.
In 1961, Dick Cabela started selling fishing flies by mail order. For a time, Mr. Cabela ran the business from his kitchen table. Cabela’s has grown steadily ever since and the company went public last year. Coincidental with the IPO was a financial gift from West Virginia taxpayers to Cabela’s estimated to be $85 million. While June 25, 2004 was a grand payday for Cabela’s shareholders, we didn’t even get a share of stock!
The next Dick Cabela, that aspiring young man with a bankable idea, is presently living in West Virginia. But he’s not planning on staying here any longer than he has to. He’s headed to a territory where entrepreneurship is prized, not penalized. Should we blame him?
I have a hard time faulting either Wal-Mart or Cabela’s for running sting operations. First of all, both of these giants started out with one man (Sam Walton and Dick Cabela, respectively) mapping strategy at his kitchen table-the epitome of entrepreneurial spirit. And second, if fools want to game each other for the right to stuff cash into corporate pockets, then why should we expect Wal-Mart or Cabela’s to refuse it?
West Virginia needs to go back to the (kitchen) table.
In American society, small businesses play an important role in two critical areas-the creation of wealth and preservation of democracy. Yet the political class in our state has ignored these distinctions ever since New Deal theology became their official religion. For seven decades now, the New Dealers have been the uncontested ruling party and it is not surprising that small businesses are a small part of our economy. In West Virginia, growing an ever-bigger government (and increasingly, enshrining monopolies or oligopolies) has been promoted as our only opportunity to achieve prosperity.
West Virginia has gone out of its way to stifle small business development. To illustrate this point, let me relate that I know of two area businesses that closed their shops for the same reason-Wal-Mart was selling these shops’ most popular items at prices less than the shops could buy them at wholesale.
Ordinarily, one could fall back on the argument that Wal-Mart is an efficient behemoth that understands retail better than anyone else to explain the demise of their small competitors. But that argument fails in this case, at least in part, because the City of Clarksburg reportedly offered Wal-Mart $6-8 million in tax abatements to locate there. For a period of time, the city also stationed a police detachment inside of the Super Wal-Mart store. To my knowledge, the actual total cost of these subsidies has not been made public.
As Marlin asks in "Finding Nemo": With friends like these, who needs anemones?
As surprising as this may sound, the City of Clarksburg is not at fault in this instance. West Virginia’s antiquated tax code is. Clarksburg had no choice but to enter a bidding war for the Super Wal-Mart lest one of four neighboring incorporated towns reel it in. And if it’s not Wal-Mart, it’s another big project. For the past three decades, Clarksburg has survived financially only because of the business and occupation taxes collected on construction of new stores and government buildings.
A perfect example of this frenzy is the F. B. I. facility, better known in these parts as the Fingerprint Factory because it was touted as an economic development project. Clarksburg fought hard to ‘shoestring’ annex the faraway Fingerprint Factory because of the revenue that the construction taxes would bring in. In the long run, the federal facility is a tax-loser for the city. Its annexation has increased sprawl. And sprawl all but guarantees that dead zones, such as the old business district, stay dead. Clarksburg, however, has no choice but to live for the short term and find the quick tax fix.
Until such time as state government allows cities the right to draft a modern tax code, we will continue on this destructive path. Our cities and counties also need to merge governments. If for no other reason, it will prevent them from cannibalizing one another in order to tax the next Wal-Mart or Fingerprint Factory.
In looking forward, small business development should be the state’s top priority when making any of these changes. A good example of what to do and what not to do can be learned from the Cabela’s case.
In 1961, Dick Cabela started selling fishing flies by mail order. For a time, Mr. Cabela ran the business from his kitchen table. Cabela’s has grown steadily ever since and the company went public last year. Coincidental with the IPO was a financial gift from West Virginia taxpayers to Cabela’s estimated to be $85 million. While June 25, 2004 was a grand payday for Cabela’s shareholders, we didn’t even get a share of stock!
The next Dick Cabela, that aspiring young man with a bankable idea, is presently living in West Virginia. But he’s not planning on staying here any longer than he has to. He’s headed to a territory where entrepreneurship is prized, not penalized. Should we blame him?
I have a hard time faulting either Wal-Mart or Cabela’s for running sting operations. First of all, both of these giants started out with one man (Sam Walton and Dick Cabela, respectively) mapping strategy at his kitchen table-the epitome of entrepreneurial spirit. And second, if fools want to game each other for the right to stuff cash into corporate pockets, then why should we expect Wal-Mart or Cabela’s to refuse it?
West Virginia needs to go back to the (kitchen) table.
Friday, February 4, 2005
WVU Offers Lessons in "Cancer Stories"
The men and women you will meet in "Cancer Stories" are the bravest of the brave; they personify courage and integrity better than any model that I know. Please cherish the moments that you spend with them for they and their families have made great personal sacrifices to bring you their stories.
David G. Allen, "Cancer Stories"
If I sent you a one-hour video documentary about cancer, I doubt that you’d bother to watch it.
If I attached a note saying Ken Burns gave it his "Thumbs up!", then maybe you might.
If I pasted a flashy, "Emmy Winner!" sticker on the video, then maybe you’d put it in the "When I get time." pile.
What would you do, though, if I sent you a one-hour video and told you that it will help you answer the age-old question, "What is the meaning of life?"
The video and its companion book are "Cancer Stories: Lessons in Love, Loss and Hope." Some of you have already seen it. "Cancer Stories" premiered on WVPBS in December 2003 and has been re-broadcast. The four stations owned by WV Media, which also owns the State Journal, also aired "Cancer Stories" (2004), uncut and commercial-free.
Most of you, and nearly all of America, are not aware of "Cancer Stories." It is my intent here to change that.
Cancer remains the most dreaded diagnosis. As soon as the doctor utters the word, the patient’s mind starts asking, "How long do I have?" Not only does cancer instantly confront us with our mortality but it also makes us realize that the treatment will be a long and grueling ordeal.
I have long wanted to record the impact of the cancer diagnosis and the early days of the patient’s treatment. Too often, we read only the testimonials written by cancer survivors. We need these testimonials-for inspiration, and for science. But testimonials do not tell the whole story.
As we age, we lose loved ones to cancer. In subtle ways, we harden, or perhaps callous, our emotions to protect us from the next loss. It’s perfectly natural that we react this way. But it is precisely for this reason that older, experienced reporters cannot truly report the cancer story. So it came into my mind that the ideal reporter for this story should be the young, curious, and unjaded, journalism student.
I was appointed to the Advisory Board of the Mary Babb Randolph Cancer Center 2000. From that vantage, I felt I had the standing to propose this project to West Virginia University President, David C. Hardesty, Jr. The concept was simple enough. Students from the Perley Isaac Reed School of Journalism would interview patients being treated at the MBRCC and WVU Press would publish their stories.
The "Cancer Project", as it was first called, was embraced across the WVU campus. But it could not have happened without the support of eight wonderful cancer patients. They are the men and women who have completely opened their lives to you and to the rest of the world. They sacrificed their privacy so that you might have less of an ordeal when cancer comes knocking on your door.
When I say the patients sacrificed their privacy, I mean exactly that. The student reporters were not only invited into the exam room but they were also invited into the patient’s home. It is this unique, fly-on-the-wall perspective that allows you the audience to share each cancer story as if you were a member of the family.
The doctors and medical staff at MBRCC are to be commended for the important roles they played in this project. Before work began, the journalism students attended lectures on cancer, medical terminology, and treatment options. Their extensive preparation allowed the students to be professionals on assignment.
You will, of course, see the doctors in their role as doctors. But perhaps, for the first time, you will also see the emotional rollercoaster that cancer doctors also ride.
Thirty journalism students recorded "Cancer Stories" in print, photographs, and video. The 220-page book comes with a DVD of the documentary. In June 2004, the video documentary won the Midwestern Regional Emmy award in the Informational Programming category. All of us who have worked on the project believe that the book will be heralded just as prominently.
West Virginia University has garnered high praise from its peers in academia and healthcare. "Cancer Stories" is being considered nationally as a teaching medium for medical students. And Journalism schools across the country are now considering similar "real life" reporting classes for their curricula.
To order your copy of "Cancer Stories", please visit www.wvupress.com or dial 1-866-WVUPRESS. [1-866-988-7737]
David G. Allen, "Cancer Stories"
If I sent you a one-hour video documentary about cancer, I doubt that you’d bother to watch it.
If I attached a note saying Ken Burns gave it his "Thumbs up!", then maybe you might.
If I pasted a flashy, "Emmy Winner!" sticker on the video, then maybe you’d put it in the "When I get time." pile.
What would you do, though, if I sent you a one-hour video and told you that it will help you answer the age-old question, "What is the meaning of life?"
The video and its companion book are "Cancer Stories: Lessons in Love, Loss and Hope." Some of you have already seen it. "Cancer Stories" premiered on WVPBS in December 2003 and has been re-broadcast. The four stations owned by WV Media, which also owns the State Journal, also aired "Cancer Stories" (2004), uncut and commercial-free.
Most of you, and nearly all of America, are not aware of "Cancer Stories." It is my intent here to change that.
Cancer remains the most dreaded diagnosis. As soon as the doctor utters the word, the patient’s mind starts asking, "How long do I have?" Not only does cancer instantly confront us with our mortality but it also makes us realize that the treatment will be a long and grueling ordeal.
I have long wanted to record the impact of the cancer diagnosis and the early days of the patient’s treatment. Too often, we read only the testimonials written by cancer survivors. We need these testimonials-for inspiration, and for science. But testimonials do not tell the whole story.
As we age, we lose loved ones to cancer. In subtle ways, we harden, or perhaps callous, our emotions to protect us from the next loss. It’s perfectly natural that we react this way. But it is precisely for this reason that older, experienced reporters cannot truly report the cancer story. So it came into my mind that the ideal reporter for this story should be the young, curious, and unjaded, journalism student.
I was appointed to the Advisory Board of the Mary Babb Randolph Cancer Center 2000. From that vantage, I felt I had the standing to propose this project to West Virginia University President, David C. Hardesty, Jr. The concept was simple enough. Students from the Perley Isaac Reed School of Journalism would interview patients being treated at the MBRCC and WVU Press would publish their stories.
The "Cancer Project", as it was first called, was embraced across the WVU campus. But it could not have happened without the support of eight wonderful cancer patients. They are the men and women who have completely opened their lives to you and to the rest of the world. They sacrificed their privacy so that you might have less of an ordeal when cancer comes knocking on your door.
When I say the patients sacrificed their privacy, I mean exactly that. The student reporters were not only invited into the exam room but they were also invited into the patient’s home. It is this unique, fly-on-the-wall perspective that allows you the audience to share each cancer story as if you were a member of the family.
The doctors and medical staff at MBRCC are to be commended for the important roles they played in this project. Before work began, the journalism students attended lectures on cancer, medical terminology, and treatment options. Their extensive preparation allowed the students to be professionals on assignment.
You will, of course, see the doctors in their role as doctors. But perhaps, for the first time, you will also see the emotional rollercoaster that cancer doctors also ride.
Thirty journalism students recorded "Cancer Stories" in print, photographs, and video. The 220-page book comes with a DVD of the documentary. In June 2004, the video documentary won the Midwestern Regional Emmy award in the Informational Programming category. All of us who have worked on the project believe that the book will be heralded just as prominently.
West Virginia University has garnered high praise from its peers in academia and healthcare. "Cancer Stories" is being considered nationally as a teaching medium for medical students. And Journalism schools across the country are now considering similar "real life" reporting classes for their curricula.
To order your copy of "Cancer Stories", please visit www.wvupress.com or dial 1-866-WVUPRESS. [1-866-988-7737]
Friday, January 21, 2005
Driving Through Fantasyland on Cruise Control
Dr. Tom Witt and his colleagues at WVU have issued an excellent (and sobering) report on the State Road Fund. While you may have already read comments by Dr. Witt and Transportation Secretary Fred VanKirk about the report, I believe that there is one paragraph that you need to read for yourself. It appears in the accompanying text box.
"In comparing the West Virginia highway system in 1984 with that of the present highway system, several characteristics have remained unchanged. These include ranking first in the percentage of highways under state jurisdiction, last in vehicle miles driven per capita and per licensed driver, and first in total highway miles per capita. One characteristic that has changed is the reliance on annual appropriations from the state General Revenue Fund. In 1982, West Virginia was ranked first of the fifty states in the percentage of annual appropriations from the General Revenue Fund. At present, the West Virginia State Road Fund receives no appropriations from the General Revenue Fund; the last annual appropriation from the General Revenue Fund occurred in 1983."
Future of West Virginia’s Highway System, p.5; Drs. Tom S. Witt, Patrick C. Mann, Mehmet S. Tosun; 2004
The state put the Road Fund on cruise control in 1984 when it was decided that only dedicated user taxes would have to carry the highway budget. It should be obvious that when you rank first in highway miles per capita and last in vehicle miles driven per capita that a user fee revenue system will not keep pace with expenditures.
A second flaw in cruise control budgeting is that WV Code §11-14-5(3) exempts the state’s biggest fleet of vehicles, school buses, from paying motor fuel taxes. Big yellow school buses may not damage the roads the way coal trucks do, but buses wear out roads just the same as medium-weight trucks do. Perhaps even more, since we heavily salt bus routes in wintertime.
And the third flaw is our elected political class. They have found a lot of new uses for gasoline taxes other than repairing roads. The Courtesy Patrol and regional offices of the Department of Motor Vehicles have siphoned millions from the Road Fund. On a positive note, patronage jobs were created.
The elected political leaders will soon likely suggest to you that Road Fund user taxes need to be hiked. You will probably hear, "One more nickel per gallon is not much to pay for good roads!" Please, don’t believe this come on. Throw your nickels in a wishing well if you want, but don’t throw them at Charleston.
Once again: You cannot address the Road Fund’s insufficiency of user taxes by increasing those same user taxes when you are first in road mileage and last in usage. Even if you raise taxes, higher taxes will further reduce driving and fuel consumption. A tax cut, on the other hand, would likely improve the Road Fund. And any tax cut would most assuredly benefit the general retail economy. Follow the nickels.
According to the WVU report, "A comparison of West Virginia highway financing with that of surrounding states as well as Delaware and North Carolina shows that West Virginia had the highest per capita highway user tax revenue among these states in FY 2000." West Virginia’s regressive tax code already punishes working people. Do we dare nickel and dime them into 50th place?
There was a time when the legislature and governor understood that user taxes alone could not balance the highway budget. The solution was a transfer from General Revenue. The General Revenue transfer addressed the fact that school bus fuel is exempt from tax. The General Revenue transfer also took into account two other important points. First, contractors, material suppliers, vendors, and their employees who are paid by the Road Fund pay business and income taxes which go into the General Fund. This is a bigger drain on the Road Fund than you’d ever imagine. And second, most jurisdictions around the nation earmark a portion of real estate taxes for the maintenance of county or township roads. The transfer tried to address the fact that, in our state, property taxes do not support local roads.
General Revenue Fund transfers did not make for a perfect system of funding the highway budget. But one thing they did do was to cause the legislature and governor to examine and prioritize annual spending. Once the highway budget went on cruise control, however, the #1 priority eventually became the Budget Digest.
The other side of the highway budget has to do with costs. In this space last May, I reported that a flag person was paid $30.01 per hour on highway projects. The flag person pay rate has since risen to $30.51 and won’t stop there. If paying a flag person more money than a nurse earns doesn’t convince you that changes are needed, then there is no use discussing highway cost issues any further.
Addressing the problems outlined in "Future of West Virginia’s Highway System" will require decisive cost cutting as well as General Revenue Fund transfers. The decisions will not be politically popular. They never were, of course, and that’s how we ended up on cruise control in 1984.
"In comparing the West Virginia highway system in 1984 with that of the present highway system, several characteristics have remained unchanged. These include ranking first in the percentage of highways under state jurisdiction, last in vehicle miles driven per capita and per licensed driver, and first in total highway miles per capita. One characteristic that has changed is the reliance on annual appropriations from the state General Revenue Fund. In 1982, West Virginia was ranked first of the fifty states in the percentage of annual appropriations from the General Revenue Fund. At present, the West Virginia State Road Fund receives no appropriations from the General Revenue Fund; the last annual appropriation from the General Revenue Fund occurred in 1983."
Future of West Virginia’s Highway System, p.5; Drs. Tom S. Witt, Patrick C. Mann, Mehmet S. Tosun; 2004
The state put the Road Fund on cruise control in 1984 when it was decided that only dedicated user taxes would have to carry the highway budget. It should be obvious that when you rank first in highway miles per capita and last in vehicle miles driven per capita that a user fee revenue system will not keep pace with expenditures.
A second flaw in cruise control budgeting is that WV Code §11-14-5(3) exempts the state’s biggest fleet of vehicles, school buses, from paying motor fuel taxes. Big yellow school buses may not damage the roads the way coal trucks do, but buses wear out roads just the same as medium-weight trucks do. Perhaps even more, since we heavily salt bus routes in wintertime.
And the third flaw is our elected political class. They have found a lot of new uses for gasoline taxes other than repairing roads. The Courtesy Patrol and regional offices of the Department of Motor Vehicles have siphoned millions from the Road Fund. On a positive note, patronage jobs were created.
The elected political leaders will soon likely suggest to you that Road Fund user taxes need to be hiked. You will probably hear, "One more nickel per gallon is not much to pay for good roads!" Please, don’t believe this come on. Throw your nickels in a wishing well if you want, but don’t throw them at Charleston.
Once again: You cannot address the Road Fund’s insufficiency of user taxes by increasing those same user taxes when you are first in road mileage and last in usage. Even if you raise taxes, higher taxes will further reduce driving and fuel consumption. A tax cut, on the other hand, would likely improve the Road Fund. And any tax cut would most assuredly benefit the general retail economy. Follow the nickels.
According to the WVU report, "A comparison of West Virginia highway financing with that of surrounding states as well as Delaware and North Carolina shows that West Virginia had the highest per capita highway user tax revenue among these states in FY 2000." West Virginia’s regressive tax code already punishes working people. Do we dare nickel and dime them into 50th place?
There was a time when the legislature and governor understood that user taxes alone could not balance the highway budget. The solution was a transfer from General Revenue. The General Revenue transfer addressed the fact that school bus fuel is exempt from tax. The General Revenue transfer also took into account two other important points. First, contractors, material suppliers, vendors, and their employees who are paid by the Road Fund pay business and income taxes which go into the General Fund. This is a bigger drain on the Road Fund than you’d ever imagine. And second, most jurisdictions around the nation earmark a portion of real estate taxes for the maintenance of county or township roads. The transfer tried to address the fact that, in our state, property taxes do not support local roads.
General Revenue Fund transfers did not make for a perfect system of funding the highway budget. But one thing they did do was to cause the legislature and governor to examine and prioritize annual spending. Once the highway budget went on cruise control, however, the #1 priority eventually became the Budget Digest.
The other side of the highway budget has to do with costs. In this space last May, I reported that a flag person was paid $30.01 per hour on highway projects. The flag person pay rate has since risen to $30.51 and won’t stop there. If paying a flag person more money than a nurse earns doesn’t convince you that changes are needed, then there is no use discussing highway cost issues any further.
Addressing the problems outlined in "Future of West Virginia’s Highway System" will require decisive cost cutting as well as General Revenue Fund transfers. The decisions will not be politically popular. They never were, of course, and that’s how we ended up on cruise control in 1984.
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