For years, we have heard the question asked in West Virginia: What is the state doing to improve and diversify its economy? The question is rooted in the complaint that the state’s economy is tied too tightly to extraction industries.
State leaders have heard that question as well. However, when they see what they believe is an opportunity to create economic development, another question arises: Is the state qualified to pick economic winners and losers?
And yet another question then: If the state is going to be an investor in an economic development project, how much of the public’s money should it risk?
Economic purists will argue that the government should not be using taxpayers dollars on investments that may be risky or turn out to be losers. If the bank won’t provide the money, why should the taxpayers?
However, West Virginia has become more aggressive in partnering with potential large businesses, and that means investing capital, typically for site preparation and infrastructure. Some of these investments are low risk, like Nucor Steel.
The state will provide up to $315 million in matching funds for the company’s infrastructure investments over three phases of development for the Mason County plant. That’s a huge number, but Nucor is a Fortune 150 company and an industry leader.
That is a low-risk investment.
Currently, West Virginia is planning another huge investment — $290 million for site preparation and infrastructure at the old Weirton Steel site for Form Energy. This is a new company that plans to build large electricity storage batteries using a new technology. Form says it will employ 750 workers by 2029.
Form has big names behind it, as Brad McElhinny reported. “Among Form Energy’s backers is Breakthrough Energy Ventures, which includes billionaire investors like Bill Gates, Jeff Bezos and Richard Branson.” Form is also benefiting from incentives under the federal Inflation Reduction Act.
The House Finance Committee has just passed and sent to the floor a bill allocating $105 million of the total $290 million incentive package. But there were objections. Mercer County Republican Delegate Marty Gearheart questioned the expenditure.
“I don’t think we have a good deal in front of us,” he said. “I don’t know that the state of West Virginia wants to be involved in using our capital as risk capital.”
Form Energy sounds like an incredible opportunity for West Virginia, especially in the northern panhandle, which has been pummeled by the closing of Weirton Steel and other factories. And even if Form fails, the state will have developed a prime industrial site.
Form is a higher risk investment than Nucor, and that is the conundrum. It is reasonable to ask whether West Virginia can afford to invest hundreds of millions of taxpayer dollars to try to expand the state’s economy.
Then again, given the opportunities that may come with Form Energy and similar investments, can the state afford not to?