Plant’s tax credit, increased power rates cancel jobs benefit

It’s still not clear just how far state and county officials might be willing to go in terms of tax breaks to help Century Aluminum agree to reopen a plant that has been closed since February 2009. But a critical 3-2 decision by the West Virginia Supreme Court of Appeals last week that denied an attempt by the company to get its annual county property taxes cut from slightly more than $1 million to about $350,000 a year could prove to be the deciding factor.

Three years ago, appraisers for the West Virginia Department of Tax and Revenue valued the closed plant at $73.1 million. Jackson County officials used that figure to come up with an annual county property tax bill for the company of about $1.09 million for the 2010 tax year. Century Aluminum hired Joseph Kettell, a business valuation expert for International Appraisal Co. to make a separate appraisal that was based on the future profitability of the plant. This appraisal came up with a value of only $23.5 million for the plant, based on estimates influenced heavily by the fact that the plant is more than 60 years old.

Under this appraisal, Jackson County would realize only about $350,000 a year in property taxes from Century Aluminum, a reduction of nearly $740,000. This would force major cuts for Jackson County operations, beginning with the county board of education, which would experience the largest reduction in revenue.

Already, the 2012 state legislature, with the urging of Gov. Earl Ray Tomblin, has approved a major tax credit of $20 million for Appalachian Power Co. so that company can give Century Aluminum a lower rate on its electric bill if and when it reopens the idle plant and puts hundreds of people back to work.

But more recently, the state Public Service Commission has been asked to consider increasing rates for Appalachian Power Company’s residential customers by as much as $45 million a year to allow the rates for Century Aluminum to be reduced even more.

Chief Justice Menis Ketchum and Justice Brent Benjamin, the only Republican on the five-member Supreme Court, were the two who voted against last week’s decision to uphold the State Tax Department appraisal of the aluminum plant’s property. They indicated they believed the state tax commissioner pulled the appraisal “out of the air.”

At this point, there is still no guarantee that the idled aluminum plant will reopen and provide about 600 jobs. But if and when the plant does resume production, it was Kettell who predicts the aging facility can count on no more than 10 years of profitable operations.

The most compelling fact is that if this plant does reopen and puts 600 people to work at $75,000 a year, that means a $45 million annual boost to the economy. But the combination of a $20 million state tax credit and the possible $45 million in higher rates for residential customers of AEP adds up to $65 million, a steep price to pay for a decade of increased employment.

Meanwhile, under state law in West Virginia, everyone who owns a motor vehicle is supposed to have automobile insurance. But there are still many who are driving without coverage. State officials recently estimated that one of every seven drivers in this state still doesn’t carry this insurance.

Two years ago, the Legislature enacted a new law that established a new electronic system to replace the state’s Division of Motor Vehicles paper system that identifies which motorists do have insurance. The new law was aimed at providing a more efficient way for state officials to identify those drivers who do not have the necessary insurance.

And the DMV has now entered into a contract with Insur-Rite, a Salt Lake City firm, to install a new system at a cost of $600,000 a year for the next three years that will have the new electronic system up and running statewide by the Jan. 1, 2014 deadline.

Insur-Rite officials have indicated that after Utah began using its electronic database to identify those without auto insurance, the percentage of uninsured drivers in that state has dropped from 23.1 percent to only 3.7 percent. West Virginia’s Deputy DMV Commissioner Steven Dale told a reporter recently he thinks it is possible that reducing the number of uninsured drivers in the state could lead to lower insurance premiums.

Finally, the recent Memorial Day weekend and the annual visit to cemeteries by many West Virginia residents to place flowers and other items at the graves of family members and friends reminds us that this state may have laws on the books that spells out rules and procedures to regulate the maintenance of these cemeteries.

But it also reminds us that there is no state agency given the responsibility to enforce these laws about proper maintenance and upkeep. Laws have been proposed in recent years at legislative sessions that would address this problem but so far lawmakers have not seen fit to pass this them. However, two years ago HB4457 was approved that allows families to visit cemeteries that may be located on private property and also strengthened the law against so-called “desecration” of graves.

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