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Governor seeks review of Tobacco Commission funds
Two local members don't expect problems

Thursday, February 27, 2014

By BULLETIN AND AP REPORTS -

RICHMOND — Two area members of the Virginia Indemnification and Community Revitalization Commission say they do not expect any problems to arise from Gov. Terry McAuliffe’s request for a financial accounting of the panel.

The commission “doesn’t have anything to hide, and we don’t have anything to be ashamed of,” said Del. Danny Marshall, R-Danville, who has served on the commission for several years.

The 31-member Virginia Indemnification and Community Revitalization Commission was formed in 1999 to support economic development in the state’s tobacco-growing region, which remains economically depressed. It manages a $1 billion endowment created from one-half of Virginia’s share of the master settlement with the nation’s tobacco companies.

It also has contributed funds to most major economic deals in Henry County and Martinsville for the last several years. Most recently, it provided $1,155,000 in the form of a Tobacco Region Opportunity Fund (TROF) grant to bring Kilgour Industries Ltd. to Henry County. Kilgour plans a $27.3 million investment here that will result in 155 new jobs.

In a letter dated Feb. 20, McAuliffe’s chief of staff said the request is part of a review of state government, including “performance measures” for state agencies. The letter was obtained by the Richmond Times-Dispatch.

The records sought range from fiscal 2008 through fiscal 2013. They include fund balances, interest earnings and debts, and a list of economic

(Continued from Page 1-A)

revitalization grants awarded in each year. The latter would include projected returns on investment and jobs created for each project.

The letter also seeks a separate list of any grants or money spent that the review determined was not devoted to economic revitalization or job growth, along with an explanation of why the grant was awarded.

The commission’s performance has been examined in the past, most recently in September 2011.

That study by the General Assembly’s Joint Legislative Audit and Review Commission (JLARC) found that some of the $756 million in tobacco settlement money the commission had spent since 2000 for economic development had helped the economically struggling regions of Southside and southwest Virginia. The report, however, found some of the projects the commission funded offered only “marginal” economic impact.

Marshall said neither that JLARC study nor a Blue Ribbon Committee review found “any glaring things out there that we are doing wrong.”

Marshall said he thinks the review was prompted by the election of a new governor who was not familiar with certain agencies at the state level, including the tobacco commission.

In contrast, “the previous three governors had a lot more knowledge about the tobacco commission than” McAullife, Marshall said.

Among the former governors, Bob McDonnell had been a state attorney general, Tim Kaine had been the state’s lieutenant governor and Mark Warner had traveled throughout the state, so they all knew about the commission’s work, Marshall said.

But the commission has had problems in the past. In 2010, former state Finance Secretary John W. Forbes was convicted of defrauding it of $4 million by using grant money for personal spending.

Del. Terry G. Kilgore, R-Scott and co-chairman of the tobacco commission, took McAuliffe’s letter in stride. He said most of the commission’s money is tied up in securities.

“We’ve lost some — we’ve not been getting as much return in the past two or three years as we had in the early years,” he said.

On the request, Kilgore said, “I don’t know about the intentions. I’m just going to take it on faith that they just want more information.”

Former state delegate Don Merricks of Pittsylvania County, who recently was appointed to the commission, said the commission should be accountable.

“Basically the way I interpret it, they are looking at all agencies ... I think it’s great. The one thing I have always said is accountability is important, and if you’re doing what you’re supposed to be doing, it’s not a big deal anyway,” he said.

Merricks said he does not anticipate that the review will uncover any problems, and “I don’t think they are looking for impropriety” with the review.

In cases of investments made by the commission that had limited results, Merricks said the commission uses data from the Virginia Economic Development Partnership to help forecast the potential success of projects. However, the commission is unable to predict the future.

“You just do your best and hope for the best,” Merricks said. “It’s kind of like if a frog had wings, he wouldn’t bump his rump on the ground.”

“... I think the tobacco commission has got a pretty good track record, especially in Martinsville and Henry County,” where it has been involved in most major economic deals in the last several years, he added.

All in all, if there are positive outcomes as a result of the review — for instance, “if they can come up with a better method or a better way” of deciding which projects to fund — “that’s great,” Merricks said. “But I don’t think that’s the intent. Accountability is important, and you have to be accountable to someone.”

 

 
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