West Virginia taxpayers are subsidizing a highly profitable $7.4 billion Danish multinational corporation to build a factory in Jefferson County. Rockwool, which earned nearly a quarter of a billion dollars in 2017, is set to receive millions of dollars in direct and indirect subsidies by local and state taxpayers. The company will receive a ten-year free pass on real property and personal property taxes on its $150 million plant. And with a reported $22 million of infrastructure and direct investment from the state, it will be one of the most expensive tax giveaways ever in Jefferson County. It should not be a surprise that Rockwool’s profit margins are high. The promised benefit is 120 jobs, plus some “payments-in-lieu.”

Which begs the question: why pay companies to locate in West Virginia? Are we really better off? What is the long-term effect? What’s the likelihood a company will leave or fail at the end of their tax incentives like Norm Thompson or STaSIS Engineering? It’s time that the Legislature put controls in place to answer basic questions in a systematic way about the costs and benefits of subsidies before throwing more money at luring companies.

Unfortunately, West Virginia has few ways to examine the impacts of these investments. More importantly, the state has never accounted for the externalities of industries that pollute. Here in Jefferson County, there has been no economic analysis of the impact of Rockwool’s emissions. This would require both an understanding of science and the economics of pollution. What we do know is that Rockwool will not be paying for it. The people and land who will receive the emissions—primarily in Jefferson County—will be paying for it with increased health costs, lower property values, and future cleanup. These kinds of externalities are simply ignored. Like the cost of the tax subsidies, the state should also begin to address all of the costs of pollution.

Of course, the joke here is on Jefferson County: rather than being paid to absorb the pollution from the Rockwool plant—the taxpayers of Jefferson County will be paying Rockwool for the “privilege” of receiving the pollution. Rather than pay its fair share of the tax burden for schools, Rockwool seeks tens of millions of dollars in cash from the taxpayers to pollute the very people who are writing the checks. Even worse is that Rockwool—seemingly realizing that it is not as popular as it assumed it would be—has started strategically sprinkling funds around the county by donating to nonprofits like Rotary and the Chamber of Commerce. Rockwool likes to claim it is a “good neighbor,” but no one should forget that Rockwool’s “donations” to Jefferson County are less than its tax breaks.

The solution is, at a minimum, to require cost-benefit analyses of all public monies spent on private projects like Rockwool. The Legislature should require that a full analysis of the public funds involved be revealed along with a public comment period prior to the approval by any governmental body that needs to approve the tax breaks and subsidies. A few years ago, we were promised real tax reform when the Legislature changed hands. Today, small businesses continue to pay business and inventory taxes while large businesses like Rockwool won’t. For too long, the economic development game has ignored the costs of bringing in new businesses and forgotten that small businesses cannot fairly compete when we are forced to subsidize companies like Rockwool.

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