2017-06-07 / Opinions

Another hiatus in state budget talks

At The Capitol
by Phil Kabler
for the Charleston Gazette-Mail

After 10 days in special session failed to bring the Senate and House of Delegates any closer to resolution of the impasse over the 2017-18 state budget, legislators voted to put the session on hiatus for a second time – until this past Monday, June 5.

That will leave just 25 days for the House and Senate to break the impasse and pass a state budget before the new budget year starts on July 1. If no budget bill is enacted by then, nonessential government services will have to shut down.

After most legislators went home on the evening of May 24, Gov. Jim Justice had Republican and Democrat leaders in both houses stay behind for a series of closed-door meetings with the various legislative cliques over the next day and a half.

Declaring himself as the “mediator in-chief,” Justice employed his version of shuttle diplomacy, shuttling between the groups of legislators housed in various Capitol building meeting rooms in an attempt to find compromise between glaringly different Senate and House of Delegates’ plans to raise revenue to balance the 2017-18 budget.

“I want to get this budget deal done, and a mediation session will hopefully help us get there,” Justice said, announcing the meetings with legislators. “We are all West Virginians and we all want a path forward that will help our people. Rarely has West Virginia had this opportunity in the midst of a terrible crisis; we don’t want to lose this moment.”

Asked if he was making progress at one point as he shuttled between meetings with Senate Democrats, Senate Republicans, House Democrats and House Republicans, Justice shrugged and commented, “We’re working, we’re working, we’re trying.”

While the talks did not result in a breakthrough prior to the long Memorial Day weekend, House and Senate leaders were encouraged that all sides are talking.

“It’s one of the more productive series of conversations we had with him,” House Speaker Tim Armstead, R-Kanawha, said of some two hours of meetings Justice had with House leadership on Thursday.

A key sticking point has been the widely different proposals by the House and Senate to raise revenue to help close a deficit in the 2017-18 state budget.

Senate Republicans favor a plan to lower income tax rates by 20% over two years, making up some of the lost revenue by raising the state sales tax from six percent to 7.25 percent. It’s a plan that Justice has supported, despite bipartisan opposition in the House and, lately, from Senate Democrats.

Critics contend that the proposal would raise about $147 million to balance the 2017-18 budget – mainly because the sales tax increase would go into effect on July 1, while the income tax reductions would not start until January 1, 2018 – but would lead to even worse budget shortfalls each year afterward as the income tax cuts increase.

The House sent a strong message of opposition Wednesday evening with an 85-0 vote to refuse to concur in the latest version of the Senate plan – a vote that prompted the decision to put the special session on hold to allow time for leadership to try to work with Justice to come up with a compromise.

“It’s the huge increase in the sales tax that bothers me the most with what they did,” House Majority Leader Daryl Cowles, R-Morgan, in making the motion to refuse the Senate changes.

Earlier Wednesday, Senate Democrats also unanimously opposed the plan, which passed the Senate on a mostly party line 18-13 vote, also raising objections in what they called a shift in tax burden from the wealthy to the lower- and middle class.

“We’re going to gamble that we’re going to grow our economy, have these additional resources, and not have a national recession,” said Sen. Mike Romano, D-Harrison, adding, “My God, if it goes the other way, we’re headed for disaster.”

Romano said the income tax cuts mirror failed attempts at “trickle down” economics of the past.

“Give to the rich, and they’ll create jobs for everyone. It hasn’t worked at the national level, and it won’t work in West Virginia,” he said.

Meanwhile, the House has favored a more conservative plan to raise revenue, mainly by eliminating some sales tax exemptions in current law, the largest being telecommunications services – mostly cellphone plans – that would raise $60 million a year.

The House’s plan would raise about $100 million a year of new revenue, which falls about $150 million short of the total increase needed for Justice’s proposed $4.35 billion budget.

After 10 days and an estimated cost of $306,000, the Legislature went on hiatus having passed just one bill in special session, extending a fund used to subsidize Workers’ Compensation premium payments for volunteer fire departments through June 30, 2020 (SB1010).

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