A Project of The Annenberg Public Policy Center

West Virginia Race Goes to the Dogs

Special election for governor brings out the worst in Republicans and Democrats alike.


Summary

If West Virginia’s special election for governor were a greyhound race, the winning dogs would be “Falsehood” and “Distortion.” In dead last? “The Truth.”

Both candidates — Republican Bill Maloney and acting Gov. Earl Ray Tomblin — and their well-financed surrogates are engaged in one of the most dishonest campaigns this year. The race, which mercifully will come to an end Oct. 4, has centered in large part on a greyhound dog breeding company owned by Tomblin’s mother and a mining company that Maloney hasn’t owned for five years.

Among the false and distorted claims in TV ads airing this month:

  • Tomblin falsely claims Maloney “sent our jobs to Pennsylvania.” The fact is Maloney sold his share of Shaft Drillers International in 2006, and he had nothing to do with that company’s 2010 decision to move its headquarters to Pennsylvania.
  • The Republican Governors Association wrongly tells viewers “you got the bill” for the millions paid to a dog breeding business owned by Tomblin’s mother. The money came from the state’s Greyhound Breeding Development Fund, which is financed by gamblers — not all taxpayers.
  • Maloney claims Tomblin’s votes in support of the breeders fund were somehow to blame for a state Health Department decision years later to cut a clothing allowance for poor children. Not true. Besides, the cut was restored.
  • Maloney also claims waste and mismanagement in the state’s weatherization program happened “under Tomblin’s watch,” but there’s no evidence of that. Problems documented in a federal audit released while Tomblin was acting governor occurred before he took office.
  • A group funded in part by the Democratic Governors Association wrongly accuses Maloney of wanting to “eliminate business incentives for everyone.” In fact, he said he wanted to create incentives that are “open to everybody.”

Analysis

West Virginia voters go to the polls Oct. 4 to select the person who will fill the remainder of former Gov. Joe Manchin’s four-year term. Manchin was elected to the U.S. Senate on Nov. 2, 2010, and state Senate President Earl Ray Tomblin was elevated to acting governor on Nov. 15, 2010. The state’s highest court ordered a special election, rather than allow Tomblin to remain in office until Manchin’s term expires in January 2013.

Tomblin has been in the West Virginia Legislature since 1974, when he was elected to the House of Delegates. He was elected to the Senate in 1980 and is the state’s longest serving Senate president. He has a long public record, which makes him ripe for attacks that are verifiably true — such as he voted to raise his pay and took state-funded trips. He also has family members — his wife and brother — who have held public jobs.

Maloney is a businessman and political novice who won his first election in May, when he won his party’s gubernatorial nomination by defeating seven other candidates. He owned a drilling company based in Morgantown, W.Va., for mining and other industries, but sold that business in 2006 and is now a consultant. He received some notoriety for helping to rescue 33 miners who were trapped for weeks in a mine shaft in Chile last fall.

But forget all that. The question now is whether the Democrats can hold on to the governor’s seat or whether the party will suffer another surprising defeat in an off-year special election — as it did in New York’s 9th Congressional District. Tomblin was comfortably ahead in the polls early, but the race has significantly tightened in recent weeks.

Did ‘Greedy’ Maloney Move West Virginia Jobs to PA?

In “Greedy,” an ad that started to air Sept. 12, the Tomblin campaign criticizes Maloney for doing what lots of business owners do: incorporate their company in Delaware and, if they are lucky, sell the business one day for a profit. The ad then goes on to say Maloney “allowed” jobs to be moved from West Virginia to Pennsylvania. But it’s not true. The company’s chief financial officer told us Maloney sold the company four years before it announced it would move its headquarters to Pennsylvania.

[TET ]

Tomblin for Governor TV Ad: “Greedy”

Narrator: Bill Maloney – born and raised in New York – incorporated his West Virginia-based business in Delaware to avoid paying West Virginia taxes. Maloney then sold his company for millions, and allowed the headquarters and West Virginia jobs to be moved to Pennsylvania. Bill Maloney got his, then took his millions and retired to a gated community in Georgia. Bill Maloney. Just another greedy millionaire using West Virginia for personal gain.

[/TET]

Maloney’s official biography says he co-founded North American Drillers, North American Pump and Supply Company and Shaft Drillers International. Shaft Drillers International announced in January 2010 that it would move its headquarters from Morgantown, W.Va., to Pennsylvania. The Pittsburgh Post-Gazette reported that the headquarters has 600 people and that 85 people would move immediately.

The TV ad cites the Post-Gazette story as a source for the claim that Maloney “allowed the headquarters and West Virginia jobs to be moved to Pennsylvania.” The article supports the claim that jobs moved to Pennsylvania, but not that Maloney “allowed” that to happen.

We asked how Maloney can be blamed for moving jobs to Pennsylvania, and Tomblin spokesman Chris Stadelman told us he believed that Maloney still has a stake in the company. But Stadelman provided no evidence of it.

Update, Sept. 27: After we published this article, Stadelman provided us with a section of Maloney’s 2011 financial disclosure form that showed the Republican candidate received “more than $1,000” in “compensation” from North American Drillers LLC, which is an operating company of Shaft Drillers International. But that does not support the claim that Maloney “allowed” SDI to move its headquarters and jobs to Pennsylvania. The Maloney campaign released a statement to the news website West Virginia Watchdog saying Maloney “signed a non-compete agreement with the company, which involved compensation.” Such deferred compensation is a common business practice when a top executive leaves a company.

Casie Shaner, the chief financial officer of Shaft Drillers International, told us in an interview that Maloney sold his shares to his partner in January 2006. In November 2006, that partner sold the company to Scott Kiger and Charles Rigg. In 2006, Shaner said, “nobody knew we were going to move out.” Maloney’s campaign biography also says he sold his share of the businesses in 2006. He now runs his own consulting company.

Ironically, the Tomblin ad cites a Charleston Gazette story as the source of its claim that Maloney “sold his company for millions.” Indeed, the story says he is a “self-made millionaire.” But it also carries this warning about the potential for some candidates to distort the loss of jobs at Shaft Drillers:

Charleston Gazette, April 9, 2011: Opponents may try to make hay with the pending relocation of the headquarters of one of the companies he founded, Shaft Drillers International, from Westover to Perry Township, Pa., with the loss of about 100 jobs. Maloney sold his share of the company in 2006.

On Sept. 20, the Tomblin campaign released yet another TV ad that includes the same false charge that Maloney “sent our jobs to Pennsylvania.” But just repeating a falsehood doesn’t make it true.

Did West Virginians Get Stuck with Tomblin’s ‘Bill’?

In an ad that began airing Sept. 13, the Republican Governors Association focuses on a theme that has been central to Republican attacks against Tomblin: the Legislature’s creation of the Greyhound Breeding Development Fund in 1993.

[TET ]

RGA TV Ad: “Dogs”

Narrator: Politicians in Charleston are in a race to help themselves. Since Earl Ray Tomblin’s been in charge, the state dog track fund paid more than $2 million to the family of Earl Ray Tomblin. With Tomblin in power, the Legislature pushed through a law to divert more state money to the Tomblins. Earl Ray got his way. You got the bill.

[/TET]

The TV ad, titled “Dogs,” suggests that Tomblin used his influence to create and expand the fund, and says the fund has “paid more than $2 million to the family of Earl Ray Tomblin.” It is true that Tomblin’s mother’s business has benefited from the dog breeders fund. Tomblin Kennel Inc., a dog kennel and racing business owned by Tomblin’s mother, Freda, has received “at least $2.5 million since 2000,” according to the Charleston Daily Mail‘s review of state records. And, while Tomblin did not sponsor the bill creating the fund, he was chairman of the committee that had jurisdiction over that bill and he supported it.

However, the RGA ad goes too far:

  • It’s misleading to say the Legislature “divert[ed] more state money to the Tomblins” — a claim that refers to a policy disagreement over whether or not to allow out-of-state breeders to receive money from the breeders’ fund. The Legislature cannot “divert” money to any individual or company, since the payouts are made to breeders whose dogs place in the money.
  • It falsely suggests all taxpayers got stuck with a $2 million “bill” for Tomblin’s mother’s business. The ad says: “Earl Ray got his way. You got the bill.” Taxpayers weren’t billed for the money, although one could argue it could have been used for other state purposes rather than to help the state’s greyhound dog breeding business.

Some background: In 1993, the Legislature passed, and the governor signed into law, a bill that created the Greyhound Breeding Development Fund. State records show that bill originated in the House Judiciary Committee, but it went through the Senate Finance Committee — which Tomblin chaired at the time. The fund was designed to encourage the growth of the state’s dog breeding and racing industry — similar to a fund for thoroughbred breeders. In 1994, Freda Tomblin’s business received $85,623 from the fund — “the most any single breeder was paid,” according to a March 26, 1995, story in the Charleston Gazette.

Not long after the fund was created, the racing commission adopted a policy to allow out-of-state dog breeders to receive money from the fund. The Charleston Gazette said the policy took effect in May 1994. The Charleston Gazette reported that Tomblin lobbied successfully to pass legislation (again through his committee) to reverse that policy in 1995. This is the basis for the ad’s claim that “with Tomblin in power, the Legislature pushed through a law to divert more state money to the Tomblins.”

It’s true that the legislation increased the amount of money available to in-state breeders, including Tomblin’s mother. But state lawmakers cannot “divert” money to any individual breeder, because the fund distributes money to dog owners based on performance. As the state audit explains, 10 percent of the money in the fund goes for administration costs and the rest goes for “supplemental purses paid directly to registered owners of West Virginia greyhounds.”

The ad also makes it appear as if the money is coming from all taxpayers — telling viewers at the end of the ad that “you got the bill.” That’s not the case at all.

We asked Mike Schrimpf, an RGA spokesman, how taxpayers “got the bill.” He said the breeders fund is “state money because it is collected by the state and dispersed by the state,” and money in the fund “went to the Tomblins when it could have been used for other purposes.”

Yes, technically it is “state money,” and in theory the state Legislature could have changed the law to use the money for general purposes. And there is no question that Tomblin Kennel has benefited from the fund and continues to benefit. (Last year, Tomblin Kennel received $268,000, an independent West Virginia watchdog website reports.) But the fund is financed through a tax on pari-mutuel betting at racetracks and table gambling at casinos, plus a portion of unclaimed winnings from video lotteries, as explained on page 14 of a 2008 audit.

Gamblers “got the bill,” not all taxpayers, and to suggest otherwise is misleading.

Tomblin, ‘Poor Children’ and Seniors

In an ad that first ran Sept. 7 titled “New Low,” the Maloney campaign makes the claim “that the state cut the clothing allowance for low-income children, but Tomblin voted to increase the payout to his family’s business. Poor children suffer. The Tomblins still profit.” But the logic behind this claim makes no sense. Tomblin had nothing to do with the cut in the clothing allowance, and his votes on the dog breeders fund — which is what the ad is referring to — occurred years before the state Department of Health cut the clothing allowance program in 2004.

[TET ]

Maloney for West Virginia TV Ad: “New Low”

Narrator: We already know that Earl Ray Tomblin voted to direct over $3 million to his family’s greyhound racing business. But there is more. Newspapers report that the state cut the clothing allowance for low income children but Tomblin voted to increase the payout to his family’s business. Poor children suffer. The Tomblins still profit. No wonder the Daily Mail asked: “How an ethically challenged guy like this got to be a heartbeat away from being Governor.”

[/TET]

Let’s consider the cut in the clothing allowance. The Charleston Daily Mail said the Health Department cut the program because a surplus in the state’s welfare program was drying up.

Daily Mail, July 8, 2004: The state spent about $ 8.6 million last year handing out $ 150 clothing vouchers each to 57,223 students. This year, the budget allows for about $ 5.7 million in $ 100 vouchers expected to go to 56,890 children.

The $ 3.1 million cut was part of a financial overhaul of the state’s Temporary Assistance to Needy Families program, which provides about $ 144 million each year in federal and state welfare funds for direct cash assistance, child care reimbursements and job training programs for poor families.

The state has for several years been operating with a surplus welfare budget; the surplus is gone and officials say they have to slow spending accordingly.

So, how can the Maloney campaign blame Tomblin for favoring his family’s breeding business over poor children?

The Maloney campaign points to an April 14, 2005, editorial in the Charleston Daily Mail that criticized the creation of the Greyhound Breeding Development Fund in 1993 – 11 years before the state Department of Health made a decision to cut the clothing allowance. The Daily Mail editorial asked the question, “Why is the state subsidizing dog and horse breeders when the money could be used for so many other purposes?” It also criticized Tomblin for voting on legislation that benefited his family’s business. We leave it for others to debate West Virginia’s legislative priorities, but the fact is that Tomblin’s votes had nothing to do with the decision years later by the Department of Health.

It should also be noted that the cut in the clothing allowance was restored. The editorial cited by the Maloney campaign also said that, under pressure from the Legislature, the administration restored the cut in the clothing allowance that winter. A Nov. 9, 2004, Daily Mail story said then-Gov. Bob Wise announced he would use a portion of the state budget surplus to provide a $50 winter clothing allowance to all those who had already received $100 – making the allowance whole.

In an ad that first aired Sept. 15, Maloney builds on his depiction of Tomblin as a selfish politician by claiming that Tomblin is “looking out for himself, not West Virginia seniors.”

[TET ]

Maloney for West Virginia TV Ad: “Hurting Seniors”

Narrator: We already know that Earl Ray Tomblin directed millions to his family’s greyhound business instead of helping poor children. Now, a federal audit reveals that Tomblin wasn’t there for West Virginia seniors. Under Tomblin’s watch, money from a federal program designed to lower the utility bills of senior citizens was spent on lobbyists, shoddy workmanship and special benefits for the politically connected. Earl Ray Tomblin. 36 years of looking out for himself, not West Virginia seniors.

[/TET]

The ad starts by saying, “We already know that Earl Ray Tomblin directed millions to his family’s greyhound business instead of helping poor children.” It then claims that a federal audit found that “under Tomblin’s watch, money from a federal program designed to lower the utility bills of senior citizens was spent on lobbyists, shoddy workmanship and special benefits for the politically connected.”

This is a distortion of the facts. The evidence shows that the mismanagement occurred before Tomblin became governor, so it could not have happened “under Tomblin’s watch.”

The campaign cites a federal audit of a $38 million stimulus grant for the state’s weatherization program, which is designed to help reduce energy bills for low-income residents, including seniors. The Governor’s Office of Economic Opportunity administers the grant money and oversees the program. The report was publicly released in June, and it says “the audit was performed between March 2010 and February 2011.” Tomblin became acting governor Nov. 15, 2010, so the audit period overlapped the administrations of Manchin (eight months) and Tomblin (three months). However, the problems cited in the report occurred before Tomblin became governor:

  • Auditors found $47,500 in questionable consulting contracts — all of them from 2009. The Manchin administration addressed this issue seven months before Tomblin took office. The report said, “To their credit, officials recognized these contract and documentation weaknesses and took action in April 2010, to ensure that similar situations do not occur in the future.”
  • The report criticized the quality of the weatherization work and the state’s oversight of the local agencies responsible for that work based on a review of state inspection records from September 2009 to August 2010 — all prior to Tomblin taking office. Federal auditors accompanied state inspectors on follow-up visits and found continuing problems, but it’s not clear from the report when those visits took place. (The Department of Energy’s Office of Inspector General, which conducted the audit, declined to answer questions we had about the report. “Our report speaks for itself,” said spokeswoman Karen Sulier.)
  • The problems cited in the report were already being addressed by the state before the audit period closed in February 2011. The report says, “After we brought these matters to their attention during the course of our audit, State officials told us that they will address a number of issues discussed in our report.” The report concluded, “The actions initiated by West Virginia are positive and should, if properly executed, help improve the likelihood of meeting Recovery Act weatherization goals.”

Manchin — who supports his fellow Democrat — told the Associated Press that it is “not accurate” to blame Tomblin for mismanagement in the weatherization program. “That was under my watch. That wasn’t Earl Ray,” Manchin told the AP. “Once it was brought to our attention, we moved to correct things immediately.”

Democrats Distort Maloney’s Position on Business Incentives

One outside group heavily involved in the campaign is America Works USA, a Washington, D.C.-based political action committee funded in part by the Democratic Governors Association. America Works has spent more than $1.7 million on TV ads attacking Maloney, as of Sept. 22, according to the West Virginia Secretary of State’s office.

In a Sept. 13 ad, America Works says Maloney wants to “eliminate business incentives for everyone … ending tax incentives that encourage companies to move here and create new jobs.” That’s a distortion of his position. Maloney opposes special tax breaks to lure companies to West Virginia, but he supports tax changes that he says will “level the playing field and make it easy for everyone to get tax breaks.”

[TET ]

America Works USA TV Ad: “Greedy Millionaire”

Narrator: We’ve seen it before. Greedy millionaires mining West Virginia for their personal gain. And turning their backs on us. That’s Bill Maloney. He built his business with taxpayer funded government loans. But now he wants to eliminate business incentives for everyone else. Ending tax incentives that encourage companies to move here and create new jobs. Bill Maloney already made his fortune. Shouldn’t we get the same chance.

[/TET]

With this ad, America Works is building the line of attack advanced by the Tomblin campaign that Maloney is “greedy” — claiming he is an example of “greedy millionaires mining West Virginia for their personal gain.” In particular, it is critical of him for taking “taxpayer-funded government loans” and now wanting “to eliminate business incentives for everyone else.”

It’s true that Maloney’s business received state loans, albeit not very much. The Democratic group cites the Republican candidate’s response in a Sept. 7 debate to a question about whether the state should “do more or less to offer incentives” to attract businesses to West Virginia. Maloney says he received $50,000 in state loans for a building. But his full response undercuts the claim that Maloney “wants to eliminate business incentives for everyone else.” In fact, he went on to say that such financial assistance should be “open to everybody.” (Maloney’s answer starts at about 50 seconds into a YouTube video of the debate.)

Maloney, Sept. 7: What we need to do is level the playing field and make it easy for everyone to get tax breaks and quit giving away the store to special interests and lobbyists that happen to work for a big company that gets tax breaks. I saw firsthand in my little business way back when we needed a building we got a TEDDI loan they called it. We got a $50,000 loan, $10,000 for each person we employed, anybody could get one of these. It wasn’t just a chosen person, chosen business. We’ve got high-tech guys coming out of WVU, Marshall everywhere else that we need to have some tax incentives for to let them all thrive but we need to make it open to everybody and make it an open process and not back door deals.

As evidence that Maloney wants to eliminate “tax incentives that encourage companies to move here and create new jobs,” America Works also cites an April 19 Associated Press article in which Maloney repeats his opposition to special tax breaks. But the article also says that Maloney wants to change the tax code to eliminate the personal property and inventory taxes that he claims discourage manufacturing plants from locating in the state.

Associated Press, April 19: “I think if we can get rid of this thing they call personal property tax we can actually have some chemical plants come into this valley and have some steel mills come back to Weirton, and we can grow other parts of the economy,” Maloney said.

So, it is pretty clear that Maloney does support tax changes to lure new businesses to West Virginia.

— by Eugene Kiely, with Michael Morse and Wendy Zhao

Sources

Democrat Manchin wins West Virginia Senate seat, NBC projects.” Reuters. 2 Nov 2010.

New Acting Governor Officially Takes Over.” MetroNews. 15 Nov 2010

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About Bill Maloney.” Biography. Maloney for West Virginia. Undated.

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Kercheval, Hoppy. “From Morgantown, help for Chilean miners.” Charleston Daily Mail. 15 Oct 2010.

Walshe, Shusannah. “New York Election: Republican Bob Turner Takes Anthony Weiner’s Seat.” ABC News. 14 Sep 2011.

Bingham, Amy. “West Virginia Governor’s Race Tightens 2 Weeks Before Special Election.” ABC News. 21 Sep 2011.

Stewart, Bonnie. “Pa. company is part of ‘Plan B’ to rescue Chilean miners.” Pittsburgh Post-Gazette. 2 Sep 2010.

“Governor Rendell: Mining Construction Company to Move Headquarters to Greene County, Creating 98 Jobs.” Press release. Pennsylvania Department of Community & Economic Development. 25 Jan 2011.

Kabler, Phil. “Seedings made in governor’s race.” Charleston Gazette. 9 Apr 2011.

Rivard, Ry. “Tomblin attacked for racing affiliation.” Charleston Daily Mail. 5 May 2011.

Special Report: West Virginia Racing Commission Funds.” West Virginia Legislative Auditor. Oct 2008

Adams, Steve Allen. “A Dossier on Senate President Earl Ray Tomblin.” West Virginia Watchdog. 4 May 2011.

“Audit Report on “The Department of Energy’s Weatherization Assistance Program Funded under the American Recovery and Reinvestment Act in the State of West Virginia.” Department of Energy’s Office of Inspector General. Jun 2011.

Kabler, Phil. “Manchin makes ‘robocalls’ for Tomblin’s campaign.” Charleston Gazette. 19 Sep 2011.

Electioneering Communication. West Virginia Secretary of State. 22 Sep 2011.

“Bill Maloney likes business incentives for himself, but not for you.” Press release. West Virginia Democratic Party. 8 Sep 2011.

Associated Press. “Businessman is needed for governor, Maloney says.” 19 Apr 2011.

 

http://www.goeo.wv.gov/weatherization/Pages/default.aspx