The Virginia Tobacco Indemnification and Community Revitalization Commission has invested $432 million in over 900 revitalization projects since 2000, according to the Blue Ribbon Review Panel (April 17, 2011). This report examines the outcomes of these investments in Southwest Virginia, a region that continues to face economic and educational challenges. The panel’s findings highlight several persistent issues:
An area of great concern with regards to the ability to revitalize the economy is education for young people and adults...(for)...Congressional District 9 (a proxy for Southwest) have much higher percentages of population over age 25 with no high school degree, and much lower percentages of people with bachelor's degrees or higher than either the rest of the state or the nation...
an analysis of Virginia Department of Education annual school enrollment data by grade shows that a number of localities in the region have much larger numbers of students in the ninth grade than in the twelfth grade three years later...The largest drop in numbers of students is occurring between the ninth and tenth grade...it is likely that most of these students are dropping out of high school and will not graduate.
These educational challenges may be linked to out-migration, which often results in a remaining population with lower income levels and reduced motivation for educational attainment. The report further notes:
As in the rest of Virginia, economic growth in Southside and Southwest Virginia is occurring in the services industries, including professional, technical, administrative support, healthcare, educational, repair, personal services, and "Other" employment categories including utilities, transportation, communication, information, finance, insurance, and real estate. However in the Southside/Southwest regions, the percentage of overall wages in these "information age" industries is still substantially below the rest of the State.
Despite growth in service industries, the lower wage scales in these sectors contribute to the continued out-migration of educated individuals seeking better opportunities elsewhere. The report raises a critical question:
Given the existing state of the Southside and Southwest economies, it is fair to ask whether the expenditure of over $400 million by the TICR since the year 2000 on "regional transformation" projects has had the desired transformative effect on the regions...Despite this spending, population in the region continues to decline, wage rates still lag behind the rest of the state, there is persistent high unemployment and poor educational attainment is still endemic.
James A. Bacon at Bacon's Rebellion provides further insight into the Commission’s impact:
Not only has the Commission failed to "transform" the Southside/Southwest Virginia economy, it has squandered many of its resources. By keeping the old economy on life support, it has failed to steer sufficient resources into the new economy. For all intents, the economies of Southside and Southwest Virginia look very much like they did 10 years ago...
A historical perspective from M. Stanton Evans in "Where Do All the Welfare Billions Go?" (Human Events, February 6, 1982) highlights a broader issue with public spending:
One has to wonder how it is possible to spend these hundreds of billions to alleviate poverty and still have the same number of poor people that we had, say, in 1968...It prompts the more suspicious among us to ask: What happened to the money?...[A] tremendous chunk of these domestic outlays goes to pay the salaries of people who work for and with the federal government - including well-paid civil servants and an array of contractors and "consultants," many of whom have gotten rich from housing programs, "poverty" studies, energy research grants, and the like...
The Commission’s spending has included projects like tourism development in Abingdon and the Barter Theatre. The outcomes of these investments, particularly those approved in 2008, remain under scrutiny for their effectiveness in driving economic growth.
Bacon's Rebellion also addresses the limitations of education-focused investments in the region:
"Virginia mill towns, like mill towns everywhere across the United States, lack the size to create knowledge - intensive labor pools. They lack the business clusters that support industry-specific innovation. And they lack the amenities required to recruit, retain and remunerate the highly educated employees needed to run, or start up, successful enterprises...mill towns aren't even in the race..."
"even if the (Tobacco) Commission followed the advice of its blue ribbon study group and invested more heavily in education, it wouldn't make much difference. Tragically, the vast majority of newly educated residents of Southside and Southwest simply would emigrate to metro regions where they could better utilize their skills and make more money. This problem is not unique to non-metropolitan Virginia -- it's a pattern seen across the country."
Letter to the Bristol Herald Courier:
Re: Do The Right Thing With Tobacco Funds. I've said both here and on my website for years just what this report has stated. It has proven me right about the fraud and waste surrounding the Tobacco grants.
With deep respect, the Herald Courier can't seem to connect the dots. Remember the Measure of America on July 20th that ranked SW VA at 400 and E. TN at 421, the bottom 10% in the nation? Bacon's Rebellion is correct in regards to more education. We already have a vast education system in Tri-Cities with lots of college graduates, and they leave in droves for the exact reason he states. So why would doing something that lower-ranked E. TN already does expect to change anything?
Please spare me the Lebanon hype (see Northrop Grumman and AMS-CGI: More jobs or more hype?) and look at reality. Those are government contractor jobs and get tens of millions in corporate welfare, and aren't paying anywhere near what we were told. In addition, there's no public oversight.
Where's the zillions of jobs Bristol was supposed to get from fiber optic that has cost BVU $60 million in debt plus an additional $10 million in Tobacco grants? Their failure is the inability to get the state to shift more taxpayer jobs out to Bristol. Everybody in SW VA can't work for the government! It's already 30% of the workforce in many areas as it is.
The changes they suggest still ignores the endemic political corruption and social apartheid that poisons this region. Will somebody explain how the Barter Theatre, tourism development, etc. qualify as anything less than pork-barrel waste? Look again to lower ranked E. TN with its poverty-wage tourism industry.
The report makes it clear that the $432 million has produced virtually nothing. We better deal with reality!
In response to critiques about the lack of actionable solutions, a regional economic developer suggested redirecting Tobacco Commission funds in a more effective way. The following proposal aims to address educational and economic challenges without creating dependency or incentivizing inefficiency:
This approach aims to reward effort and accountability, ensuring that only motivated individuals benefit. Employers who commit to hiring graduates from these programs and paying at least $10 per hour for a minimum of one year could receive compensation or tax breaks, provided they hire locally and avoid using temp agencies. Payments to employers would be made after the employment period, not before.
An example of this model’s success involved a local business that funded workforce training in basic electricity, resulting in improved employee skills. Beyond such targeted support, businesses and residents should be encouraged to achieve self-sufficiency without ongoing public funding, reducing reliance on subsidies and grants.
| Sector | SWVA (% Decline) | USA (% Change) |
|---|---|---|
| Arts, Ent., & Rec. | -20% | 6% |
| Wholesale | -25% | 3% |
| Construction | -35% | 24% |
| Information | -45% | 2% |
| Mining | -50% | -11% |
Notes: Excluding mining, SWVA experienced the greatest declines in sectors that grew nationally. The region's mining sector decline exceeded the national average. A total of 10,451 jobs were eliminated across these five sectors, with 16,774 jobs lost when including national mining sector declines between 2010-2020. The 45% decline in the information sector persists despite an estimated $200 million in public investment, likely exceeding $300-$400 million, with significant data withheld.
Ref: Zach Jackson, Virginia Tech
