About that $2 million subsidy from the Governors Opportunity Fund (GOF) to support the relocation of Norfolk Southern jobs from Roanoke to Norfolk… The Roanoke Times is asking whether it violates state law.
On the one hand, the newspaper reports, a 2006 law bars the use of GOF grants intended to underwrite the move of jobs from one Virginia community to another, as Norfolk Southern is doing in in the transfer of roughly 165 jobs from the shuttered regional headquarters office in Roanoke to the headquarters facility in Norfolk. On the other, the law provides an exception in rare instances justified by letter from the state Secretary of Commerce and Trade.
Arguably, there is an extenuating circumstance in the Norfolk Southern deal. The railroad company did consider relocating employees to Atlanta. State and local subsidies tipped the deal in favor of Norfolk. But, as of Friday, neither Senate Finance nor House Appropriations committees had received such an explanation from Commerce Secretary Maurice Jones.
Sen. Emmett W. Hanger Jr., R-Augusta, co-chairman of the Finance Committee, said, “I need an explanation of what went on, since I don’t have clarity. … The intent of the law is, of course, you shouldn’t [subsidize the relocation of jobs from one Virginia locality to another] except in rare circumstances. Then, in that rare circumstance, you need to justify it through appropriate channels to let people know what you did. It does seem like on the surface there, that they haven’t complied with that in a timely manner, and it may not be appropriate.”
Bacon’s bottom line: Here’s the key question for which the public has no answer: How seriously did Norfolk Southern contemplate moving the jobs to Atlanta? We can start by asking which business functions were being moved. Could those business functions have integrated into Norfolk Southern operations as efficiently in Atlanta as in Norfolk? How expensive was Atlanta office space compared to Norfolk office space? How did the workforce characteristics compare for purposes of recruiting? What other factors might have come into play? Virginia taxpayers need to know that the railroad company wasn’t, well, railroading the state into coughing up money unnecessarily.
I expect the McAuliffe administration to demonstrate that it has command of all the relevant facts and to be able to make a strong business case that the subsidies were necessary to keep the jobs. We have seen in the case of Lindenburg Industry LLC that the dispensation of GOF dollars has been loosey-goosey at times. The fact that the administration has provided no explanation for the Norfolk Southern deal does not inspire confidence.
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