Tobacco Commission: Six of Eight Projects Fail

The old logo

The old logo

 By Peter Galuszka

Down Danville way, of eight companies that have received money from the Tobacco Region Opportunity Fund (the old, embattled tobacco commission) only two have managed to fulfill contractual obligations to create jobs and help the local economy.

According to a report by Vicky M. Cruz in the Danville Register & Bee, the six firms that have failed to meet their obligations mean a loss of 1,340 potential jobs and $63 million in local investment. It also means that Danville owes the tobacco commission $5.47 million.

Here’s a list of the companies.

The tobacco commission has been around since 1999 to supposedly help residents in the tobacco growing areas of the state move into non-leaf related jobs. The money came from the huge multi-billion dollar Master Settlement Agreement between four cigarette companies and 46 states that had sued them over health concerns.

The tobacco commission has been a bit of a sham. Money has been doled out without checks on how it was spent or how successful projects have been. A former director ended up in prison for siphoning off funds. A state audit has been ultra-critical of the fund, which figured in the political corruption conviction of former Gov. Robert F. McDonnell and his wife.

Last month, Gov. Terry McAuliffe renamed the fund, appointed a new director and changed its board. The cases reported by the Register & Bee obviously date before the reforms. Let’s hope they work.

(Hat tip to Larry Gross).

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13 responses to “Tobacco Commission: Six of Eight Projects Fail

  1. The tobacco fund concept was stillborn.

    First – reward people who produced a product that killed people dead. Really? Do the same rural Republicans who thought that was a good idea also support the crack dealers charity?

    Second, sprinkle the money on dozens of tiny efforts to build high tech businesses in locales where the average educational level is low? What was supposed to happen? Th sprinkling of money was going to convince employers to relocate and hope the schools got better? Really?

    Finally, putting any money into the hands of the Imperial Clown Show in Richmond. Of course the money was stolen and squandered. That’s what thieves and half-wits do … steal and squander.

    The only surprise in all this is that anybody is surprised by the outcome.

  2. Of course the premier questions to ask are:

    1. – can the govt “create” jobs

    2. – can the govt create jobs by giving money to companies to hire people?

    3. – how is what the Tobacco Commission doing – any different than the
    govt giving grants to solar companies to “create jobs”?

    Would it be better for the Tobacco Commission to offer ANY CHILD who maintains a C+ average – a guaranteed paid college education – instead of what they are doing now ?

    would it be better for the Tobacco Commission to stand up community clinics including training kids to become health care providers – in places of economic distress?

  3. That must be why they wanted Puckett on the commission!

  4. Don and all others,

    Anybody who shovels economic development deals or dollars to Danville (VEDP included) should be fired. What an utter disaster, year after year. I’ve commented on this before….trying to prop up that city is a useless endeavor for this state. The demographics simply don’t merit what’s been pushed down there for years (Don knocks it out of the park on that in his post). Governors, for whatever reason, seem to have this strange emotional attachment to Danville, a city of less than 45K. If we really want to help rural Virginia, a lot of those projects and economic development dollars might actually help a place like Lynchburg (50 miles north of Danville) that at least has a major university that could provide grads to economic development projects. And it’s not all tobacco commission money either…do some detective work on other state grants and you’ll get an idea at the enormous disparity between the state pushing money to Danville over Lynchburg.

    I’d challenge everyone on this blog to take a visit to Danville AND Lynchburg in the next few months. You’ll see exactly what I mean. It is beyond rationality to see the state shovel so much money to the former compared to the later. Lynchburg has a fighting chance in the 21st century economy. It’s got some decent assets. The downtown’s ok. It’s got a decent workforce. It’s got Liberty. Centra’s a pretty good hospital/health system. Danville does not have anything approaching Lynchburg’s assets.

    It’s not up there with 460, but the consistent approach of favoring Danville over Lynchburg for economic development projects for the past 15 years is worthy of some writing. It’s one of the dumbest public policy mistakes our state government’s made in a bipartisan fashion. If rural Virginia is going to have a beacon in 21st century VA, it’s Lynchburg, NOT Danville.

  5. I’ve never understood how the state so poorly managed such a windfall. They’re almost as bad as hedge fund managers.

    I’m also confused as to why the state thought it was a good idea to try to force this region outside its area of expertise, namely farming. If the soil can support the nutrient piggy that is tobacco it can certainly support other crops. Why they didn’t just use the money to help farmers transition to growing other crops (and use the subsidy to help feed impoverished Virginians, which Danville and surrounding areas don’t lack) is beyond me.

    But hey, we got a marginally successful mold company out of the deal, so yay us!

  6. I can’t fault the logic of the Gilmore administration in setting up the Tobacco Commission. The Southside and Southwest economies were getting the stuffing kicked out of them as one key industry after another — furniture, textiles, apparel, tobacco, coal — got decimated. The region needed help badly, and the Tobacco Commission was a ready source of funds to stimulate the transition to a new economy.

    The flaw was the execution. The allocation of funds was controlled by local politicians who gave lip service to transitioning to a new economy but lacked the vision of how to do it. They pursued high-tech fantasies in Danville that never had a chance. Otherwise, the Tobacco Commission fund became a grab bag for any project that could be labeled “economic development.” The commission doled out the money in dribs and drabs, spreading it around to make everyone happy. Money was used to attract transient companies that supported low-paying jobs and had no commitment to the area.

    Hundreds of millions of dollars later, nothing has changed. But much, if not most, of the money is gone.

    • Having done some business with the state of Virginia, I would add nepotism, with a dash of corruption, to the list of reasons for the failure. Some measure of these is always unavoidable. But I agree that the flaw was in the execution, not the concept.

    • And part of it was provincialism…on that, I do fault the Gilmore Administration. The Tobacco Commission, even though it was to serve a specific area, is almost exclusively filled with people from that area…..and I believe that’s by code. That was why good execution could not occur. The Gilmore Admin. (and the Democratic GA to be fair) set up a situation where the fox was guarding the henhouse. Should have made the Commission a body with statewide membership. It would have been very helpful to have Richmond, NoVa, and Hampton Roads perspectives helping to guide the economic development decisions….

    • I can fault the logic of the Gilmore Administration. There is no quick fix for sustainable economic development. Over a couple of decades a city or a region can remake itself. Pittsburgh has done this for example. However, it’s a long and arduous effort that revolves around education, infrastructure, redevelopment, etc. Simply bribing companies to locate in an impoverished area never works. Gilmore’s plan was dead on arrival.

      As an aside, in 2013 I wrote an article for this blog titled, “Is Virginia’s Economy Tanking?” Somehow, that article was lost when you made some updates to the WordPress configuration. In the article I noted that Virginia’s gross state product was growing by less than the growth of federal spending in Virginia. That inversion had been going on for years. In other words, the non-federal economy in Virginia was shrinking. I opined that this situation was not sustainable since federal non-discretionary spending (especially for homeland security and defense) could not provide more that 100% of Virginia’s economic growth forever.

      My prediction has come true. Virginia’s overall economic growth is 0%. That puts us 48th of the 50 states ahead of only oil-dependent Alaska and perennial basket-case Mississippi.

      Wasn’t it just a few years ago that Virginia was touted (by our political establishment and many on this blog) as the best state for business?

      http://www.washingtonpost.com/news/digger/wp/2015/06/11/with-zero-gdp-growth-virginias-economy-flatlines-under-mcauliffe/

  7. Well.. I never understood what it was about the geography of Danville and to a certain extent even Lynchburg that drew employers there – as opposed to places nearer to major roads and ports.

    Lynchburg is on the James which had navigation locks then rail but it still was quite a ways from major markets and transport hubs.

    but I totally agree with Don and others – given the adult education level in those areas – you’re swimming upstream trying to attract REAL 21st century employers.. The best thing to do is to make sure they have decent health care and try to get the kids educated to 21st century standards and go seek work where they can.

    Places like Danville – these days have what I call – a rooftop economy. The grocery clerk needs a furnace. The furnace guy needs a car. The car guy needs groceries, etc, etc.

    the money just goes around…

    The buttress is the retired on social security and govt workers and pension holders. The teacher, the Sherif deputy, the post office guy and the extension office folks. Liberty “works” – Sweetbrier and others like it – no more.

    what always impresses the heck out of me driving through that area – it’s a crap load of undeveloped, rural land and each acre of it has an owner!

    contrary to conventional wisdom – quite a bit of it is under cultivation and in cattle.

  8. Woah! I am detecting elitism and ignorance in some of these comments.

    For starters, let’s stop putting down the people of Southside. It is not their fault that they were born in or ended up in a strange social structure that is based on class and a patriarchal mill structure. The main industries were mills — textiles and furnitures. The class-based economic system started in England, then New England and then moved to the Southern Piedmont from Virginia through Alabama. It was based on lots of wood and no unions. Workers were kept locked in certain skills relevant only to mill employment. It was not in the bosses interest to educate them too much because it was a requirement to run a spindle whatever.

    These people got totally screwed when the bosses and their politics, both Dems and GOP, went whole hog with globalization. It came at their expense. Six thousand people lost their jobs in Kannapolis NC in one afternoon. Why? Because Chinese or Vietnamese or Central American workers would work for next to nothing. So, they got screwed while others got rich.

    A lot of these workers live on tiny farms. Some raised small allotments of tobacco. IN fact, the entire allotment system of controlling tobacco supply and demand (to make prices artificially high) was created by COngress in the Depression. Why? They didn’t want thousands of undernourished, broke farmers and their families converging on Raleigh or Columbia or Richmond. Someone would have to build housing projects and so on.

    As far as the tobacco commission serving only tobacco areas in Virginia, that’s a sham. Virginia’s share of the tobacco settlement was north of $4 billion. That money was acquired in the name of ALL Virginians, including poor folks in inner city Richmond or Newport News or Charlottesville. Are they getting anything? Hell no. But they have suffered just as much from the tobacco habit that Virginian’s leadership has protected since the early 1600s.

    So, please. try to understand some of this. Sure these people can be taught how to do high tech — what gives you snotty NOVA types the edge on IQ?

    • It wasn’t my Grandfather’s fault that he was born into a long line of Kentucky coal miners who rarely lived very far into their 40s. So, he took his eighth grade education and moved to Detroit where he made quite a good life for himself. He was 85 when he passed away.

      If the folks from the Southside find it relatively easy to learn IT perhaps they should move to Silicon Valley where IT jobs are plentiful. The tech companies in California are demanding increased allotments of foreign worker visas because they can’t find enough Americans who can’t “learn IT”.

      You are the worst enemy of the people in Southside Virginia. You spout easy fixes and simplistic ideas that have no chance of working. You missed your calling – you should be on the Tobacco Commission.

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