W. Virginia turns around slowly. Improvement is spotty because of economic and political barriers

The sheen of recovery glows in West Virginia these days. Investment in the state is up. Business is booming in several border counties. The unemployment rate has dipped more than two percentage points since March.

``You would think that the economy is improving,'' says Tom Witt, executive director of the nonprofit Bureau of Business Research.

In fact, West Virginia is only sluggishly moving out of its worst slump in 30 years.

The state faces two large obstacles, many observers agree.

The first barrier is economic. For too long the state has propped itself up on traditional industrial pillars that are eroding, economic development officials say. Steel plants have closed in West Virginia, probably for good. Coal mines, using new technology and better management, are shrinking their work force. Instead of 59,000 mine-site workers a decade ago, West Virginia mines last year employed half that number and produced 20 percent more coal, according to the state's energy department.

``I don't think it will ever come back to the point that it'll employ all the employees it had,'' says Ted Osborne, president of a small mining company in Premier, W.Va.

The second barrier is political. West Virginia lacks a united political front to build a more diversified economy, several observers agree.

``I don't know of any state that is really making forceful, effective change and improvements in its economic base that doesn't have the state government at the front,'' says Neil Bucklew, president of West Virginia University. But in West Virginia, ``we don't have our act together.''

Grumbles Holmes Morrison, president of the state's largest bank: ``The politicians are simply unwilling to address some of the problems.''

Last year, West Virginia Gov. Arch Moore and the Legislature made rapid progress by tearing down barriers to growth and putting together a package of business incentives.

New investment totaled more than $1 billion in 1986, which Governor Moore says is greater than the previous seven years combined. By February 1986, the state had ceded to Louisiana the dubious honor of having the nation's worst unemployment rate.

But any sense of political unity was shattered this year when the Republican governor and the Democratic Legislature went head to head over an education reform package. Complains the governor: ``When I propose, they [legislators] go 180 degrees in the opposite direction.''

The result, some critics charge, is directionless development.

So far, the state has achieved a spotty, perimeter prosperity. Big projects are moving in. A US-Japanese joint venture in steel is slated for Brooke County. The transportation giant CSX plans to open a railroad repair facility in Huntington. AT&T has picked Charleston, the state capital, for a new credit-management center. For the most part, these new projects are destined for West Virginia's borders, not its economically troubled center. Of the 10 counties with the lowest unemployment rates, all border Virginia, Maryland, Pennsylvania, or Ohio. It's symbolic that Jefferson County, which has the state's lowest unemployment rate, is also the most geographically removed from the coal-fired heart of West Virginia.

``I can feel the turnaround,'' says Lysander Dudley, the governor's industrial development director. ``Yet, when you think you've got all the leaks in the dike stopped. ...'' In June, he adds, the Kinney Shoe Corporation announced it would close its plant in depressed Gilmer County. Other counties in the heart of the state lack even that level of diversification and are struggling with continued high unemployment.

``This is a state that's tremendously eager to do something,'' says Lewis Crampton, head of the nonprofit National Institute for Chemical Studies in Charleston. ``The question is deciding what to do.''

One example of the hard choices ahead is education reform, which is widely perceived as a key to economic growth.

Most West Virginia politicians say they're committed to improving education, says state school Superintendent Tom McNeel. But ``it's not to the point where legislators are willing to make deeper cuts in other departments to fund an increase in education. It's not to the point that they'll put their political career on the line and call for new taxes.

``We've got to reach consensus on what the priorities are,'' he adds.

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