July | August 2017







Proposed Federal Budget Cuts Could Affect Economic Development in Appalachia

By Leslie Haymon, policy analyst, CSG Washington, D.C.
The Trump administration’s 2018 federal budget, titled “A New Foundation for American Greatness,” proposes deep funding cuts for domestic programs and the eventual elimination of 18 independent agencies. Independent agencies exist outside federal executive departments headed by a Cabinet secretary, but rely heavily on the federal government for program and staff funding.
One agency, the Appalachian Regional Commission, or ARC, is a federal-state partnership with a long history of creating opportunities for self-sustaining economic development and improved quality of life for a population of more than 25 million in the Appalachian Region. The commission’s fiscal year 2017 appropriation was $152 million, which is a $6 million increase over fiscal year 2016 funding levels. This federal funding supports a variety of programs and initiatives to encourage economic development in the Appalachian Region.
The region, as defined by Congress, is a 205,000-square-mile area that follows the spine of the Appalachian Mountains from southern New York to northeastern Mississippi. Included in the region is all of West Virginia and parts of 12 other states: Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee and Virginia.
The commission itself is comprised of 14 members, 13 of which are the governors of the states in the region, and one federal co-chair, who is appointed by the president and confirmed by the Senate. Other staff includes the elected officials, businesspeople and local leaders who serve on multi-county agency boards known as Local Development Districts, or LDDs. LDDs, numbering 73 total, see to it that federal funds are used efficiently and effectively. They are responsible for identifying priority needs of local communities and working with local citizens to develop plans for economic development and community building.
The ARC oversees 11 program areas, ranging from education and energy to tourism development and transportation. Each of these areas engage projects designed to create new jobs, improve water and sewer systems, increase school readiness, expand access to health care, and provide technical assistance to new businesses.
These programs have afforded Appalachia significant improvements since the creation of the ARC in 1965. A February 2015 West Virginia University report outlined the commission’s impact over the course of its 50-year history. Major points of the study noted a reduction of the poverty rate by half, from 31 percent in 1960 to 16.6 percent in 2015; only 3.2 percent of Appalachian houses lacking complete plumbing compared to 2 percent nationally and 14 percent in 1960; $16 billion in leveraged private investment as a result of ARC-financed non-highway investments; and the creation of nearly 312,000 jobs and $10 billion in added earnings throughout the region.
ARC Federal Co-Chair Earl F. Gohl noted in the report, “The Appalachian Region has gone from 295 high-poverty counties in 1960 to 107 today. The region’s high school graduation rates have increased to being almost on par with the nation’s, infant mortality has plummeted, availability of potable water has gone up, and more than 2,000 miles of new highways have been built and opened since President Johnson made his historic 1964 visit to Martin County, Kentucky.”
He went on to state, “The challenge going forward is to use the region’s assets: a history of hard work, innovative solutions to complex problems, and strong families and communities to leverage today’s emerging economic opportunities into a diverse and vibrant economic future.”
Representative Evan Jenkins from West Virginia’s Third Congressional District also expressed concern for cuts to the region’s economic development programs.
“The budget … proposes eliminating programs crucial to West Virginia’s economic development and diversification—the Appalachian Regional Commission and the Economic Development Administration,” Jenkins said. “We need to do more to attract new industries to our coalfields and invest in our infrastructure, and these two programs have a track record of success in West Virginia.
“As our state struggles to recover from eight years of devastating economic policies, we cannot make harsh cuts to these programs while our families are getting back on their feet.”
That future looks less promising in the face of the 2018 federal budget. In 2016, ARC funding through the POWER, Partnerships for Opportunity and Workforce and Economic Revitalization, initiative helped offset the loss of nearly 10,500 coal jobs in the region, almost a third of the 33,500 lost in total between 2011 and 2016. From March 2016 to March 2017, grant requests for ideas to revitalize Appalachia’s economy totaled $280 million, of which the ARC was only able to fund one-quarter due to lack of funds.
“The proposed cuts to the Appalachian Regional Commission would adversely impact our most vulnerable populations in these communities, reduce or eliminate essential services, and hinder economic development and job growth,” said West Virginia Commerce Secretary H. Wood Thrasher. “Any action that places this funding in jeopardy is detrimental to the future of our communities and our state.”
Without the ARC, hundreds of millions of dollars aimed at economic stimulation programming will be drained from the region. Appalachia overwhelmingly supported President Donald Trump in 2016, who made the promise of Appalachian economic development a stronghold of his campaign platform.