Growth in West Virginia's Eastern Panhandle Comes From Virginia Prosperity and Maryland Folly

Despite the economic slowdown, despite the persistent problems of state tax and regulation policy, West Virginia's Eastern Panhandle continues to see strong growth.

Two factors contribute to the growth. One is spillover from Virginia's business friendly system. Multiple outlets consistently rank Virginia as the friendliest state for business growth.  The cluster of Northern Virginia counties within 90 minutes of Washington DC saw the most spectacular development. According to the State Journal Winchester, mere miles from Hampshire County, rocketed from 134 to 41 on the best performing cities list.

Winchester, population of near 30,000, and other growing cities along the Interstate 81 corridor, are technically suburbs of Washington.  Those who can afford to do so are streaming through the gaps and over the mountains into West Virginia, colonizing exurbs.  

Eastern Panhandle and Potomac Highlands counties are benefiting from Virginia's prosperity.

Other counties reap from the folly of their northern neighbor, Maryland.

Maryland's anti-business policies and crackdown on personal liberty drive people south of the Potomac.   According to US Census Bureau statistics, West Virginia counties bordering Maryland tend to have population and jobs growth.  The Maryland counties have either losses or growth that lags behind their cross river brethren in the Mountain State.  

Either way, Eastern Panhandle representatives need to keep pushing Charleston to reform regulatory and tax laws to continue the growth.  Jefferson, Berkeley, Morgan, Hampshire, Hardy, Pendleton, Mineral, and Grant counties are poised to reap the benefits.

Give Washington, DC back to Maryland?

A recent article in the Baltimore Sun says that Washington, DC should be given representation in Congress. I disagree it should be given independent representation.

The District of Columbia is the nations capital and in 1791 when its location was decided it was also decided it would be independent of the states. Originally the District of Columbia was set up at a 10 mile by 10 mile section of land along the Potomac carved out of both Virginia and Maryland. Washington County, DC was located on the Maryland portion, and Arlington County, DC was located on the Virginia portion.

The people that choose to live in the District of Columbia know they give up certain rights by choosing to live in a Federal District instead of a state. Everybody currently living in the District live there by choice, so they are willing giving up those rights.

The founding fathers did not want any state to hold the capital of the nation. I still believe that is a good idea. If the citizens of the District of Columbia want representation in Congress, then I believe the choice is simple. On July 9, 1846 Arlington County, DC was returned to the state of Virginia from which is was carved. The people in Arlington were then represented in Congress as part of the state of Virginia.

The same could be done now to give the people of Washington, DC representation in Congress. Simply return the Washington County portion of the District back to Maryland. They would then have representation in Congress without creating new Senate and House seats.

The Gate Test

A few years ago I had the opportunity to hear a speech by Chuck Kinder of the States Auditors Office. During his speech he spoke about the “Gate test.” Basically the test is, if you want to see how your government and economy is doing, you open the gate and see which way the people go.

As a nation, the US is doing quite well on the gate test. In fact they don’t even bother to use the gate on the southern border to get into the nation, any hole in the fence will do. This is a direct reflection on the economic opportunity available in the US. It is people’s nature to want to go where they have greater opportunity to make a better life for themselves and for a large portion of the world that place is the US. The grade for the gate test can be found in the census data. In 1950 the US population was 150 million persons and last year the US population passed the 300 million mark. In a little less than 60 years the nation has doubled. The US has earned stellar grade in the gate test.

West Virginia on the other hand has failed the gate test. In 1950 the population of West Virginia was 2 million. In 1950 we made up 1.3% of the US population. Today there are about 1.8 million West Virginians, 200,000 less than there were in 1950. That number is deceiving. On the surface it appears to be a loss of only 200,000, but today West Virginia only makes up 0.6% of the US population. If West Virginia maintained 1.3% of the US population as we did in 1950, then today there would be around 3.9 million of us. That means in less than 60 years 2.1 million “would be” West Virginian’s went missing. West Virginia’s gates are open and over half left for better economic opportunity elsewhere. That goes far beyond a failing grade.

The loss of population is more than just numbers. We all have family and friends that have had to leave to find opportunity for a better life elsewhere, breaking up the extended family structure that is a corner stone of Appalachian life. The states power in Washington has been cut in half as we only send 3 people to the US House of Representatives every two years, where in 1950 we sent 6. The burden of taxes has increased on all of us and the load is spread over fewer and fewer people. We are all feeling the effects.

We have two options as I see it. The first is to expand the West Virginia government to build a wall like the former East Germany and close the gate to prevent the people from leaving for better economic opportunity. History tells us how that will turn out. The East German government collapsed and Germany reunified. Now with Virginia being ranked at the top in economic opportunity, some may consider reunification a good thing for West Virginia.

I prefer the second option; let’s make the changes necessary to bring economic opportunity back to West Virginia. We need to make our side of the gate more attractive than the other side of the gate. Russell Sobel and his group have developed a blueprint to make that happen if we choose to make the changes. It is human nature to resist change, because change is uncomfortable and there is a fear of the unknown. I once heard insanity defined as doing the same thing over and over and expecting a different result. We must overcome that fear and make the changes or we will continue to get the same result.

Over the gate to West Virginia hangs a sign that reads “Open for Business,” but when you are going through the gate for better opportunity you only see the blank backside. It is time for a change.

Selling Heritage in the Potomac Highlands

It is no secret that the West Virginia economy relies heavily upon tourism. Credit our state government also for exploring innovative ways to bring more people and their full wallets to the Mountain State. The state division of tourism website discusses the future of "voluntourism" and also mentions a conference held last February to promote "agritourism."

Let us suggest a tried and true no brainer approach to marketing West Virginia as a vacation destination. Our erring sisters to the east whom we kicked out in 1861 have carefully crafted over the years a huge Civil War based tourism industry. Virginia hosts untold numbers of visitors to see reconstructions and remnants of that famous conflict. That and the high ratings for the History Channel prove that Americans love learning about war. They will also spend money to see heritage in person.

From before the French and Indian War until "Mad" Anthony Wayne's victory over the Shawnee, western Virginia served as a shield protecting the cities and tobacco plantations to the east. Virginia Governor Dinwiddie in 1756 ordered Colonel George Washington to oversee the construction of frontier forts. Many of these appeared in the Potomac Highlands section and some even survive as modern towns. Fort Ashby appeared in 1755, joined by Fort Defiance and Waggoner's Fort (also known as "Buttermilk") as well as many others. Each one of these installations was manned by some of the toughest and strongest men and women in colonial America. Each fort and each individual stationed therein has a compelling story to share if only people come and listen.

Some communities take advantage of their heritage. Point Pleasant reconstructed Fort Randolph and created a "Battle Days" festival that draws substantial crowds. The Potomac Highlands section of West Virginia ought to combine to form a plan to promote the region's frontier history.

West Virginia subsidizing Virginia's economic development

As residents of the Potomac Highlands, there are very few of us that do not know some one that works in the Northern Virginia. Those West Virginia employees are providing labor and services that are driving Northern Virginia's economic engine. The reason is the economic realities of Capitalism.

The first thing that you notice is Virginia's Corporate tax rate a 6.0% flat rate, where West Virginia's is a 8.75% flat rate. West Virginia has the highest workers compensation rates for businesses in the nation. West Virginia is dire need of serious tort reform. The free market uses these factors drive the businesses from West Virginia into Virginia where they are able to be more profitable.

Those same free market forces keeps the workers living here. A 3 bed room, 2 bath home in Fredrick County, VA cost $250,000 while the same size home in Hardy County, WV cost $165,000. Personal Income and property taxes in West Virginia are much lower, than Virginia. The worker in a free market just like the business wishes to retain more of his money, so he chooses to live in West Virginia were the cost of living allows him to do that.

It sounds like the best of both worlds, but it is not. West Virginia is the looser. Without the combination of both businesses and individuals paying taxes West Virginia is loosing out. The state has less money to provide services. This shows in our lack of infrastructure. One thing you can point to is US 50 which is the main artery for the northern part of the Potomac Highlands. US 50 is now the deadliest highway in West Virginia per mile driven. It's design has changed little since the 1920's and it is handling volumes of traffic for which it was never designed, and there is not enough money to upgrade it. A company located in Virginia paying 6% in taxes, pays nothing in West Virginia to use for better roads.

Our bad policies force businesses to move to Virginia, and we end up subsidizing Virginia's economy through our bad policies. Free Market Capitalism has the answer to grow West Virginia's economy. Cut the corporate tax rate to between 4% and 5% to make us equal with the lowest 10 states, and not in the highest 10 states. End Brick Streets monopoly in workman's comp insurance now rather than later. Competition among insurance providers will bring lower rates. Enact comprehensive tort reform to end frivolous lawsuits that drive out business. The combination of these initiatives will allow businesses to increase profits by locating in West Virginia, and a business located in West Virginia pays taxes in West Virginia.