Nearly a decade has passed since the passage of the Master Settlement Agreement which divvied up more than $200 billion in cigarette company proceeds between the 50 states. Virginia chose to dedicate more than half of its share — some $770 million so far — to the tobacco-growing regions of Southside and Southwest Virginia whose inhabitants were most hurt economically by the decline of the tobacco cultivation.
A big chunk of those funds were paid directly to owners of tobacco allotments, but $432 million has been funneled into development and revitalization projects for the economically lagging regions. The commission still has a $1 billion endowment capable of passing out $60 million a year or more, more or less forever. A decade later, the questions arise: Has the money been well spent and how can the funds be better spent in the future?
John Reid Blackwell raises that question in the Times-Dispatch today, drawing heavily upon a report recently issued by a blue ribbon panel tasked with reviewing the “structure and operations” of the Tobacco Indemnification and Community Revitalization Commission, the group that has dispensed the tobacco allotment funds. The commission has spent millions following the conventional economic development play book: upgrading the region’s telecommunications infrastructure, attracting and retaining manufacturing jobs, building educational capacity and supporting entrepreneurial initiatives.
Viewed within the narrow parameters assigned to it, the panel made some sound observations and recommendations.
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.
The panel suggests, among other things, tweaking administration of its tobacco-funded endowment, routinely updating the commission’s strategic plan and streamlining the governing organization. Some some proposals go deeper and may well encounter some resistance.
The panel recommends adopting an “investor” approach to disseminating funds rather than a grants approach, in which funds are parceled out to every town, city and county throughout the region as commissioners respond to “grass roots initiatives.” A foundation/endowment approach would view its spending plans as “investments” that continue to pay off well into the future. Along the same lines, it should fund fewer micro grants under $100,000 and more investments that offer the potential to “transform” the region. The panel also calls for collecting data and measuring outcomes.
Finally, and most importantly, the panel recommends investing more strategically in education. “The [panel] believes that education from preschool to high school and beyond high school is the future of Southside and Southwest Virginia. No miles of highways constructed, no tens of thousands of feet of water or sewer lines laid, nor any number of industrial park buildings erected can change this.”
Good recommendations all. The report provides excellent advice for ensuring that the tobacco endowment money is better spent. But the panel did not ask the really big question, which was outside the scope of its study mandate: Are the Southside and Southwest Virginia economies even salvageable in the Knowledge Economy. Is the Tobacco Commission fighting an unwinnable battle? Is the Tobacco Commission, in effect, spending hundreds of millions of dollars rearranging the deck chairs on the Titanic? I’ll tackle that issue in the next post.
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