- Associated Press - Monday, June 13, 2011

RICHMOND — A study released Monday by the General Assembly’s investigative arm says Virginia’s Tobacco Commission signed off on millions of dollars in economic development projects with a sketchy understanding of them, and some yielded little or no benefit in the state’s poorest region.

The Joint Legislative Audit and Review Commission said there was no way to measure outcomes for 89 percent of 1,368 project grants by the Tobacco Indemnification and Community Revitalization Commission the past 11 years.

But Southside and Southwest Virginia — regions of the state hit hard declines in tobacco, textile and other manufacturing industries the past 20 years — clearly benefited from Tobacco Commission support for scholarships, job training and the deployment of high speed Internet, according to the 180-page report.

The commission, established in 1999 to disburse Virginia’s share of the settlement from a national lawsuit against cigarette makers, has awarded $756 million in economic development and revitalization grants in 41 Virginia localities since 2000.

JLARC’s reports notes that it’s too early to know how much benefit projects awarded in the past three years will produce.

The report says $125 million the commission spent installing high-speed fiber-optic Internet service helped deliver such job-development coups as new data centers by Microsoft in Mecklenburg County and CGI-AMS in Russell County, and the distance-learning initiative at Martinsville’s New College Institute.

Without Tobacco Commission backing, the 1,075 miles of super-fast fiber optic data lines probably would not have developed so quickly in the rural, sparsely populated region which is home to some of the state’s highest unemployment rates.

The $64 million the Tobacco Commission has spent on scholarships, student loans and work force training are among its best-documented successes, said Walt Smiley, who headed the audit.

More than 6,200 students have received four-year scholarships totaling $25 million that the commission underwrote. Among 1,722 of the graduated scholarship recipients from the Southside region alone, about two-thirds returned home to work after graduation. Those who come back to the region for four years after graduation have their college loans forgiven.

Among the largest Tobacco Commission expenditures is the $155 million to aid in development of 70 regional industrial parks. It’s also an investment where benefits aren’t quickly apparent.

“Sometimes, the parks can sit vacant for years and it will look like nothing will happen, and then suddenly, there’s an important success, as recently happened in Mecklenburg County,” Mr. Smiley said, a reference to the Microsoft data center project.

But some projects are approved with little analysis by a thin Tobacco Commission staff of a project’s effectiveness or revitalization potential, the report said.

The study said a review of commission meeting transcripts since 2000 showed that the 31 commissioners are often lax in pressing applicants for economic development details about projects they want the commission to fund. It also said many stakeholders interviewed for the report complained that some grants were approved based on politics or “questionable horse trading” more than merit.

An excerpt from one Southside Economic Development Committee meeting transcript shows how local political concerns influenced a $60,000 Tobacco Commission grant for a covered bridge festival, the JLARC report said.

One Tobacco Commission member, identified only as “Commissioner A,” admitted that the cash did little for the local economy. A second commissioner asked his colleague why he had even sought the money.

“Because it was there, and the people back home were pounding on me to do it,” Commissioner A replied.

In some cases, Mr. Smiley said, transcripts indicated that some applications were put before commissioners the evening before or even the day of the meetings and approved on the spot. “The staff is then cut out of the process of reviewing them,” Mr. Smiley said.

Delegate Terry G. Kilgore, Scott County Republican and the chairman of the Tobacco Commission, and the commission’s executive director, Neal Noyes, challenged Mr. Smiley’s claim.

“I’d like to know of a single example of when that happened in the last several years,” Mr. Noyes said. “There was some of that early in the days of the commission. That doesn’t happen.”



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