January 6, 2023 - Despite Virginia General Assembly legislation in 2022 that cut into its coal- and natural gas-based revenue source, the Virginia Coalfield Economic Development Authority is seeing better times thanks to increased coal production.

Now VCEDA wants the state to help boost funding for the Coalfields Expressway Authority so it can apply for larger federal grants to accelerate progress on the incomplete 30-year interstate project.

$7 Million Increase

VCEDA Executive Director Jonathan Belcher said Wednesday that the Expressway project will see a $7 million increase under the FY 2022 federal infrastructure bill. That allocation will go to widen 2.2 miles of Corridor Q — a two-lane U.S. 121/U.S. 460 in Buchanan County.

The Expressway concept began in the early 1990s as a proposed highway link for West Virginia and Virginia to Interstate 64 and the East Coast. Over the past three decades, state and local leaders and organizations have cited the Expressway’s importance for economic development in both states.

Besides widening the Buchanan County segment to a four-lane highway, Belcher said the federal funding helps speed up Virginia’s connection with Kentucky’s Expressway segments by 2027 and improves four-lane access for businesses in that area.

Legislators Help

Belcher credited the help of Virginia Democratic U.S. Sens. Mark Warner and Tim Kaine along with Republican Ninth District Congressman Morgan Griffith.

“What would help now is some working funding for the CFX authority,” Belcher said. “We have to have specialized grant writing firms to prepare applications for larger federal grants for the Expressway.”

While the General Assembly created the Authority in 2017 to help coordinate Virginia’s efforts with Kentucky and West Virginia, Belcher said it has been dependent on VCEDA for staff support. Now, both authorities are working with the Youngkin administration and the Southwest Virginia legislative delegation to secure $500,000 in funding for the CFX Authority.

“Gov. Youngkin has mentioned the Expressway in his budget proposals for 2023,” Belcher added.

While the eastern segment of Virginia’s Expressway project has seen more progress, Belcher said the western corridor — linking with U.S. Route 23 near Pound — and the central segment in Dickenson County are equally important.

“Our goal is not to focus on one part, but we also need to connect with the Kentucky and West Virginia sections,” Belcher said. “Those connections are important for progress in Virginia. If the Expressway is only half completed, you lose half the benefit of it.”

Metallurgical Coal Demand

On VCEDA’s funding side, Belcher said a rising worldwide demand for metallurgical coal — used in the steelmaking process — has offset 2022 Virginia legislation that repealed coal tax credits. Those credits, for Virginia coal producers and energy companies using Virginia coal, allowed the authority a share of that tax windfall for supplement coal and gas severance taxes.

“The tax credit revenue was about 25% of VCEDA’s revenue at the time the credits were repealed,” said Belcher.

Elimination of those credits in a three-year phase left VCEDA relying on what had been a two-decade decline in severance tax revenue from a declining steam coal market for electricity generation. Belcher said a rising steelmaking sector in the last two years, however, has helped compensate for the tax credit phaseout.

Among VCEDA’s eight localities — Wise, Lee, Scott, Dickenson, Buchanan, Russell and Tazewell counties and the city of Norton — Buchanan, Tazewell, Dickenson and Wise counties are now the main coal producers.

“Our funding sources have stabilized since Southwest Virginia has become more dependent on metallurgical coal production,” said Belcher. “Met coal prices have gone up and it’s greatly improved the funding situation for VCEDA. Still, it’s unfortunate that we lost revenue from the tax credits.”

Belcher said VCEDA’s ability to support economic development efforts in its seven-county and Norton service area also got help in 2021 with $500,000 to support telehealth and broadband education projects such as Starlink.

While VCEDA traditionally has funded larger projects such as business expansion and attracting new businesses, Belcher said the authority’s Seed Capital Grant program has helped spur more than 170 small business startups and expansions with about 4% of VCEDA’s total annual funding.

“The program has helped create hundreds of jobs in the region and has been one of our more popular programs as it enters its sixth year,” said Belcher.

Because of the Seed Capital program’s popularity, Belcher said VCEDA has had to narrow the scope of eligible businesses to manufacturing, information technology, non-coal/gas energy and creative tourism.

“This is not to dismiss the other business types we’ve funded before, but we’ve decided to limit it to the same sectors VCEDA targets for larger business prospects,” belcher said.

The next round of Seed Capital Grant applications starts in April, Belcher said.