Today Governor Terry McAuliffe vetoed House Bill 298, 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. In explaining his veto, the Governor cited the need to spend every taxpayer dollar wisely, and the coal tax credits' ineffective performance at creating or protecting economic activity or jobs. The Governor previously vetoed Senate Bill 44, which is identical to House Bill 298.
March 23, 2016
Pursuant to Article V, Section 6, of the Constitution of Virginia, I veto House Bill 298, 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.
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.
Specifically, from 1988 until 2015, coal mine operators, electricity generators, and other coal-related companies have claimed over $610 million in tax credits. 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.
Each day, I work tirelessly to build a new Virginia economy and ensure that this commonwealth is the best place to live, work and run a business. Making the most effective use of every dollar taxpayers entrust to their government is an essential part of that effort. 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.
Accordingly, I veto this bill.
Terence R. McAuliffe