Gov. Jim Justice says his office has found a way to cover what’s expected to be a $250 million budget hole. The governor rolled out the plan in a midday meeting with top lawmakers on Friday before releasing it to the general public.
In a virtual news briefing, Justice outlined the state’s financial situation, which has been negatively impacted by the coronavirus pandemic. His plan routes federal aid dollars to various state agencies and pulls from the Medicaid surplus fund to cover the budget gap.
For weeks, Justice has said he believes federal aid would become available for states to backfill budget shortfalls related to the coronavirus pandemic. Although federal rules released alongside the CARES Act explicitly prevent that from happening, the governor’s office plan appears to replace already allocated state dollars — now being spent on response to the coronavirus — with the federal aid.
Justice said Friday some funds that were already dedicated to state agencies will be replaced by nearly $1.25 billion from the federal CARES Act. Justice explained that the funds from the CARES Act will be directed to local governments, small businesses, local public service districts, highways, hospitals and for unemployment benefits.
Additionally, $150 million from the state’s Medicaid surplus will be directed to the general revenue budget.
“We have CARES money and we have other grant monies that have come into West Virginia,” Justice said, noting that more than $2.2 billion in federal coronavirus aid has so far come to the state. “And we’ve got to find the right — the appropriate — places to put it up.”
During the press briefing, Justice’s general counsel Brian Abraham said the state sought out an outside consultant to make sure the governor’s office had the authority to use federal money to cover the general revenue budget.
State lawmakers from both parties said the plan was explained to them in Friday’s meeting. Some Democrats expressed frustration over not being able to offer input on the budget situation.
Sen. Roman Prezioso, D-Marison, said the governor arrived about 40 minutes late to the meeting with lawmakers. Prezioso, who attended the meeting virtually, said he and other Democrats invited to the meeting wondered why the financial plan doesn’t fall under the Legislature’s purview.
“He’s not gonna muck it up with a special session,” Prezioso said of the meeting with Justice and proposed budget fix. “He’s said he’s not going to have a food fight by bringing the Legislature in.”
Senate President Mitch Carmichael, R-Jackson, described the meeting as “informational” and said lawmakers did not offer input on the plan.
“We accommodated the governor’s request to go meet for the purpose of him explaining his views on spending the CARES money and getting through June 30 and the fiscal year,” Carmichael said, “That was something initiated by the governor’s office.”
Carmichael, who lost a primary election earlier this month, will hand over the gavel when the Legislature returns for its next regular session in February. But as the current leader of the upper chamber, he said he feels as though the Legislature should have control over how the state’s money is spent.
“I always think that all expenditures should be made by the Legislature and allocated by the Legislature. I’ve always felt that way,” Carmichael said. “And now, my understanding is that the CARES Act — and those legal opinions that the governor’s office has provided — that enable governors to have wide discretion on the manner in which this money is invested and spent.”
Justice said the state is expected to wind up with a $10 million surplus once the new fiscal year begins on July 1.
This time of year, the Hatfield McCoy trail system in southern West Virginia usually is buzzing with ATVs. In fact, Jeffrey Lusk, director of the Hatfield McCoy Regional Recreation Authority, said he makes almost half of his permit sales for the year from March 1 to April 30.
But for towns and local businesses along the trail system, things are pretty quiet these days. The Hatfield McCoy trails have been closed since March 20, by an executive order from Governor Jim Justice to enforce social distancing and public health recommendations from the federal government.
This includes Bramwell, in Mercer County, where the Bramwell Corner Shop would normally be enjoying traffic from the nearby Pocahontas Trail.
“Our sales are just very, very low right now,” manager Mandy Fink said on Tuesday, April 21.
Credit Emily Allen / West Virginia Public Broadcasting
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West Virginia Public Broadcasting
From A Hatfield McCoy ATV trail head in Logan County, in October 2019. The trails have been closed since March 20, 2020, due to efforts to promote social distancing.
The Corner Shop, like most restaurants throughout the state, is serving takeout orders only.
“We have a lot of local people that love the corner shop and they eat here,” Fink said, “but we also have a lot of revenue that comes off the trails, and with the trails closed right now none of that’s happening.”
For many locally owned businesses in southern West Virginia, warmer months bring in the majority of revenue, because it is when out-of-towners are most likely to visit.
On Monday, Gov. Jim Justice shared plans to reopen various operations on a six-week schedule, assuming the state continues to keep its cumulative COVID-19 positive test rate under 3 percent for three consecutive days. Still, local businesses will remain impacted by their time offline and the uncertainty around when they will reopen, and the restrictions they will continue to face.
Take Adventures on the Gorge, a rafting and outdoor tourism company based in Fayette County, which is so popular in late summer that the CEO Roger Wilson described their peak season as a “100-day war.”
“It starts on June 15, and runs through roughly September 15,” Wilson said. “That’s when the majority of our people are coming here.”
Wilson’s company employs some 400 workers every year. Normally by April he would be training new guides, but this year he said he is depending on returning senior guides to save money and avoid overcrowding.
Local Businesses, Tourism Typically A Much Needed Employer
To help with paychecks for existing employees, Wilson said Adventures on the Gorge received a loan through the Paycheck Protection Program, or PPP, through the first relief package passed by Congress.
“If we had not gotten that one, there would be about 34 people laid off immediately,” he said. “It would have made opening up for us really hard.”
Credit Caitlin Tan / West Virginia Public Broadcasting
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West Virginia Public Broadcasting
A group river rafting on the New River through Adventures on the Gorge in summer 2019. CEO Roger Wilson said he expects raft trips to operate around half capacity to encourage social distancing.
But, according to the National Federation of Independent Businesses, the country’s largest small business association, about 80 percent of small businesses in the U.S. had yet to hear back about the loans they applied for, as of April 20.
That included the corner shop in Bramwell. Manager Fink said they applied in early April, and as of April 27, the shop still had not heard anything back.
“We definitely have so many employees that cannot work at all,” Fink said, adding that the shop usually hires more people during its busier summer season. “And those of us that are working [we’re] working at least half the hours that we typically would.”
Congress passed a fourth relief package on April 23, including $321 billion for a second round of PPP loans. This was after the $349 billion Congress gave the program initially, which ran out less than two weeks after its allocation.
By Tuesday afternoon, the U.S. Small Business Administration had processed nearly 476,000 loans, according to SBA spokesman Chris Hatch. He added that the loans approved so far total more than $52 billion, which is being administered by 5,200 banks and other lenders.
Director Lusk at the Hatfield McCoy Regional Trails Authority said his organization is helping businesses that partner with the trails — mostly lodging and ATV rentals — access as much capital and assistance as possible.
Many of the businesses by the trail are family-owned with small payrolls, meaning they would benefit more from an Economic Injury or Disaster Loan, or EIDL, which are geared more toward overhead costs, and less toward pay checks. Those loans have also been difficult for some to get.
The trails authority has had to temporarily lay off 51 of its own full-time and part-time employees, who normally would sell permits at trailheads and keep paths clear. Lusk said as soon as the trails are allowed to reopen, all 51 employees could return to work.
Credit Chuck Roberts / West Virginia Public Broadcasting
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West Virginia Public Broadcasting
ATV-riders drive down a road in Gilbert, Mingo County, in July 2017. With the nearby Hatfield McCoy Trail system closed since March 20, 2020, businesses throughout southern West Virginia are noticing less revenue than previous springs.
Missing out on permit sales in late March and much of April has amounted to a roughly $1.1 million loss, he added.
“We’re optimistic that as the state begins to reopen, we’ll be in one of those early stages of reopening,” Lusk said.
The Main Street Struggle
Just outside Fayetteville at the Arrowhead Bike Farm, co-owner Rich Ireland said most of his workers are receiving unemployment.
But like Adventures on the Gorge, the Bike Farm, which has a bike shop, restaurant, beer garden and camping sites,also secured a small PPP loan which can be used for paychecks and some overhead costs.
Although they are not in peak season yet, Ireland said he is concerned about how many people will be vacationing this summer.
“I think we’ll have a season. I don’t know how good it’ll be — I don’t know if we’ll meet our expectations. But hopefully it’ll be you know, one of those where we just took a growth year — a pause,” Ireland said.
At the Meadow Bridge Drive-In in Fayette County, owner Howard McClanahan is usually open from May to October, the first three months of which are the most important for revenue.
“We’ve just been taking our time this year because we know we’re not going to get open,” said McClanahan, who added they did not apply for a loan. “I don’t see us opening before the first of June.”
It is expensive to run a drive-in theater. McClanahan said when he first took over in the 80s, each year he needed around a couple thousand dollars just to open.
“This past year it’s gone up to almost, say, around $9,000 just to get open,” he said.
There is a risk the pandemic will hurt them years from now. Not only is the Meadow Bridge Drive-In a longstanding business, open since the 1950s, but it is one of only a few drive-ins left in the state.
Ireland, co-owner of the bike farm, is one of those concerned about the lifespan of the small businesses, new and old, that give West Virginia so much character, and draw tourists from around the region.
“I think it’s going to be a shame if all are left are going to be big chain restaurants or big stores,” Ireland said.
Reports indicate that quite a few nationwide chain businesses did qualify for the small business loans, but at least a few have returned them.
Teena Merlin owns a tattoo shop in Madison, Boone County, and she was preparing to open a coffee house before non-essential businesses had to close. She said last week she was unsuccessful applying for the loans.
The pandemic could hurt shops like her own in communities that have been trying to rebuild since the decline of coal, Merlin said.
“Main Street, in little towns like this, there are lots of little things like that, and they’re trying to revitalize communities,” she said. “This is really bad for small, struggling towns who are trying to rebuild.”
Several of the small businesses interviewed that did not qualify for a loan said they plan on re-applying again for a tiny fraction of the billions of dollars Congress has allocated in the new relief package.
This story is part of West Virginia Public Broadcasting’s Southern Coalfields Reporting Project which is supported by a grant from the National Coal Heritage Area Authority.
Food banks and pantries across the Ohio Valley are seeing spiked demand as anunprecedented surge of people continue to file for unemployment benefits, with food banks facing weeks long delays to get certain products. Meanwhile, some farmers are facing a financial crisis, sitting on excess food they can’t sell — food that could be directed to food banks and pantries.
On Friday, the U.S. Department of Agriculture announced a $3 billion infusion to try to get surplus food to pantries. Those funds could eventually be put to use at pantries like one in west Kentucky.
Murray-Calloway County Needline Association Executive Director Tonia Casey had already seen demand increase for her food pantry before the coronavirus pandemic, when alocal engine manufacturer began laying off hundreds of employees.
The mandated business closures due to the virus have only accelerated that demand. Her pantry has held drive-thru service to hand out food to the public.
“We ask four questions. One of the questions was ‘How many is in your home, how much do you make, your name and address.’ About 50% of them would cry,” Casey said. “They would be crying, going, ‘I just didn’t know what I was going to do.’ And you put the food in their car, and they’re just like ‘thank you, thank you, you.’ It’s been bittersweet. It breaks my heart that they even have to ask because they’ve lost their job.”
Casey estimates she’s seen about a 30% increase in demand at her pantry, a demand she’s struggling to keep up with as she’s organizing hundreds of food packages to be distributed on a given day.
While she said her pantry’s supply has been replenished with community support and a shipment from the federal government, some food banks in the Ohio Valley are beginning to face delays in getting food amid the high demand.
“Product that I used to be able to order and get within a week or two weeks at max, is now four to six weeks. And then worst case scenario, six to eight weeks,” said Cynthia Kirkhart, Director of the Facing Hunger Food Bank in Huntington, West Virginia. “We have a network across the country of 200 food banks that are competing with everyone else to access especially what we refer to as dry product, the canned goods and shelf stable items.”
Credit Glynis Board / West Virginia Public Broadcasting file photo
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West Virginia Public Broadcasting file photo
Food is ready for loading and distribution the Facing Hunger Food Bank in Huntington, West Virginia.
Kirkhart said as the nationwide competition has increased, the price of goods who food bank purchases has also spiked. For example, she said the price of a dozen eggs have spiked from 65 cents to two dollars.
Yet, while the food pantries she distributes to are facing up to a 50% jump in demand, some Ohio Valley farmers are confronting a different problem: too much food. Market disruptions due to the pandemic are forcing some dairy farmers to dump milk and some livestock growers to consider killing off hogs or chickens because they will not make it to market.
Too Much Supply
Daniel Hayden manages his family farm in Ohio County, Kentucky, where they produce about 1.2 million chickens a year in eight chicken houses, under contract with Perdue Farms. That contract has allowed Hayden to a degree of financial freedom, yet the future stability of that has come into question with the coronavirus.
“Agriculture, it’s like turning a barge … sometimes, it can’t turn in quite the speed and demand that consumer habits change,” Hayden said. “And we try to foresee some of that, but obviously no one could have seen this coming.”
Hayden said major meat producing corporations are facing a “logistical beast” adapting to the change in demand of where food is going — away from closed down restaurants, and instead almost exclusively to grocery stores.
“It’s hard for them to swing it over to another industry because those warehouses that distribute to grocery stores can only handle so much as well,” Hayden said.
On top of that, the virus is increasingly causing meatpacking plant workers to fall sick across the country andin the Ohio Valley, slowing down production and even temporarily shuttering plants.
This potentially leaves poultry, pork, and livestock farmers with more chickens, hogs and cattle on their farms than processing plants and distribution warehouses can handle, creating a supply bottleneck.
Hayden said his farm hasn’t been affected yet, but it could leave some farmers on the brink of financial ruin if processing delays extend for weeks.
“The big concern is that we’re going to have to depopulate those chicken houses that are full to 50%, and that is euthanizing 50% of those chickens because they literally can not be processed. We can’t keep them longer because they continue to grow,” Hayden said. “For a situation that dramatic could have an existential threat towards some farmers that have brand-new farms that depend on that 100 percent processing to make their loan payments.”
Kentucky Pork Producers Executive Director Bonnie Jolly said a record number of hogs are on farms across the country, potentially creating a glut that could put pork producers out of business.
The National Chicken Councilhas asked U.S. Secretary of Agriculture Sonny Perdue to distribute billions in dollars of designated relief funding for agriculture to farmers quickly, as the effects of the coronavirus mount. National trade associations for cattle and pork farmers are alsocalling for relief, as the price of hogs and cattle have sunk as much as 50% and 30%, respectively.
Ohio Valley dairy farmers are also facing a bleak financial picture with a similar supply chain crunch.
“We have a local guy … he has three farms. He’s dumping three tankard loads of milk a day from each farm because he was an independent producer,” said Chuck Moellendick, a central Ohio dairy farmer. “A friend of ours went up to him to talk about buying some baby calves from him, and he said he was in tears.”
Credit Nicole Erwin / Ohio Valley ReSource
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Ohio Valley ReSource
Small farms are squeezed by the dairy crisis.
The dairy industrywas in distress even before the pandemic. Moellendick said for dairy farmers who don’t have financial protection through banding together in a cooperative, the effects of the coronavirus supply chain crunch could put even more dairy farmers out of business.
“He can’t even get his cows sold to a packing plant because packing plants are shutting down. The place he was shipping his milk to, they don’t have enough workers to run,” Moellendick said.
Farms To Food Banks
Meanwhile, the federal government and states are trying to find ways to solve two issues at once — give financial relief to farmers, while also providing food banks with the supply to meet a rising demand.
Ohio Gov. Mike Dewine signed an executive order, allowing millions in state emergency funds to be used to buy farm products to be directed toward food banks. The lobbying organization American Farm Bureau and food bank operator Feeding America also sent aletter to Congress, pleading with lawmakers to create a voucher program that would allow farmers with excess product to directly work with food banks in need.
On Friday, the USDA answered: with funding in part coming from the Coronavirus Aid, Relief, and Economic Security Act, USDA said itplans to purchase $3 billion in dairy, meat, and produce to send to food banks and other charitable organizations. USDA also said it has another $873.3 million available for extra food purchases, if necessary.
“The last thing dairy farmers want to see is milk being put down the drain,” said Greg Gibson, a dairy farm in Bruceton Mills, West Virginia. “If we have to give it away, we would rather give it away then put it down the drain. That’s a last resort.”
Gibson said the cooperative he works with through Dairy Farmers of America – Mideast Area has been fortunate to not have to dump milk, but he’s still selling his milk at a “distressed” price.
“I think the dairy industry is really trying to pull out all the stops they can to get milk processed and in the food banks,” Gibson said. “There’s tremendous need right now.”
For the Southeast Ohio Food Bank, it’s a solution they’re welcoming with open arms.
Foodbank spokesperson Claire Gysegem said their facility has seen a high number of calls from people asking how and where to get food, many who recently filed for unemployment.
“There’s a really strong cultural value here in Appalachia where it makes it very difficult for people to ask for help,” Gysegem said. “So, I know the need is probably five times greater than what we’re seeing.”
She said while her food bank has seen a surge of donations from communities, some of the pantries they serve have had to shut down because of coronavirus impacts. As the Ohio Valley’s economic crisis continues in the months ahead, her food bank may need the help of farmers to keep up with surging demand.
“It’s anxiety I think that we’re all feeling in seeing how far we can stretch things,” Gysegem said. “We want to take whatever is available.”
