By Phil Kabler
For the West Virginia Press Association
CHARLESTON, W.Va. — (Feb. 10) — What may go down in history as one of the most unusual and colorful State of the State addresses also opened what could become one of the most contentious legislative sessions in recent memory.
Abandoning the traditional elements of the speech, including the speaker’s dais, teleprompters, and a prepared text, Gov. Jim Justice gave his 52-minute address Wednesday from amid press row on the floor of House chambers, frequently using markers on a whiteboard to illustrate his points.
Even though his speech included jokes, self-deprecating humor, and even a Frankenstein reference, Justice’s message was anything but humorous. He warned that the state’s financial situation is “beyond dire” and that the Legislature must work with him to take bold steps – including $450 million in tax increases in the short-term – to assure the state’s survival.
“We’re dying. We are dying. It’s so blooming bad, you can’t possibly image,” Justice warned, while adding, “There’s a way out. Prosperity is in front of us.”
Currently, the Legislature has to close a nearly $500 million budget deficit in the 2017-18 state budget, a shortfall that Justice warned is on pace to grow to $700 million next year.
For the short-term, the way out Justice proposed includes tax hikes, including a 1/2 percent increase in the consumer sales tax, to 6.5 percent, to raise $92.7 million a year, and a 0.2 percent gross receipts tax on state businesses to raise $214.3 million annually.
Justice also proposed selling more than $1.4 billion in bonds for highways and transportation construction projects, to be funded with a 10-cent a gallon increase in the gas tax, an increase in license plate fees from $30 to $50 a year, and a $1 increase in West Virginia Turnpike tolls.
He called the road construction plan the “800-pound gorilla in the room,” for the state’s economy, saying that it will create some 48,000 jobs, will make state tourism “explode,” and will put displaced miners back to work.
However, the proposed tax increases drew sharp criticism from the Republican-controlled Legislature.
Senate President Mitch Carmichael, R-Jackson, said he was “incredibly disappointed” that Justice proposed major tax increases after he had seemingly opposed tax increases during the governor’s race.
“It wasn’t the expectation of the voters throughout the campaign process,” Carmichael said.
House Speaker Tim Armstead, R-Kanawha, effectively declared that Justice’s tax increase proposals would be dead on arrival in the House of Delegates.
“We had hoped that this governor would live up to his campaign promises of restructuring government and not putting additional tax burdens on our citizens, and to hear his proposal to balance our budget almost entirely with tax increases was a significant disappointment,” Armstead said.
Justice administration officials said the governor had asked for a list of possible budget cuts, as well as a list of potential sources of new revenue, and ultimately concluded the state can’t cut its way out of its budget deficit.
To make his point, Justice provided legislators with an “alternative budget plan” that would balance the budget by cutting state spending by $450 million.
Filling a full page, those cuts would require entirely eliminating general revenue funding for most state colleges and universities, as well as for a variety of programs, including Promise scholarships, senior services, in-home care for seniors, the Department of Veterans Affairs, Health Right Free clinics, grants to public libraries, among 21 other program cuts.
The cuts would eliminate nearly 3,000 state jobs, according to the governor’s office.
“Are you willing to eliminate all of our state parks? Are you willing to close all our colleges and universities except for Marshall and WVU?” Justice asked legislators.
As the first week of the 2017 regular session wound down, the stage appears set for a showdown between Justice, who believes tax increases are the only option to guide the state through the budget crisis, and legislative leaders, who are adamant against raising new taxes.
Last year, the Legislature’s reluctance to pass a tax increase led to a 92-day budget impasse that stretched into June, with a July 1 shutdown of state government looming.
That impasse was finally broken on June 13, when the House of Delegates approved a $98 million increase in tobacco taxes, the final piece of a plan to close a $270 million shortfall in the 2016-17 state budget – a shortfall that is less than half of the current budget deficit.