By PHIL KABLER
Charleston Gazette-Mail
CHARLESTON, W.Va. — Gov. Jim Justice issued a special session call Wednesday afternoon, pulling West Virginia legislators into session at 11 a.m. Thursday to address three major themes, including a revenue compromise worked out with Senate leadership that increases sales taxes but lowers income taxes.
(File photo by Sam Owens)
Justice did not spell out details in the special session call or accompanying news release, although indications are that the plan is essentially unchanged from proposals discussed last week, resulting from negotiations that began with Senate leaders on the last night of the regular session, on April 8.
However, House Speaker Tim Armstead, R-Kanawha, repeatedly has said there are not sufficient votes among the House’s 63 Republican members to pass the Justice-Senate compromise plan.
“So long as he continues to turn a deaf ear to the concerns of the House Republicans and the citizens we represent, Gov. Justice will continue to hold the padlock to shut this government down on July 1,” Armstead said in a statement issued after Justice announced plans last week to call the special session.
Since then, the House press office has issued a series of news releases citing delegates’ objections to different portions of the plan, including a proposed 1 percent increase in the sales tax and a tiered severance tax for coal and natural gas that adjusts up or down based on market prices — a proposal critics charge would impose a tax increase on metallurgical coal used in steel production.
Justice’s call specifies three main topics of legislation to be taken up in the special session:
n The revenue measure, including the sales tax increase and income tax phase-out, an income tax exemption for military pensions, a temporary increase in the corporate net tax, a surcharge on West Virginians with incomes over $300,000 and the tiered severance tax.
Previously, Justice chief of staff Nick Casey said the revenue plan includes a 1 percent increase in the consumer sales tax to raise about $180 million a year; elimination of sales tax exemptions on telecommunications and data processing services to raise more than $60 million in additional revenue; a temporary increase in the corporate net from 6.5 percent to 8.5 percent to raise $45 million a year; and a surcharge on wealthy West Virginians to raise about $4 million a year.
The plan also calls for consolidating income tax brackets from five to three and lowering rates for all income levels, amounting to about a $384 million a year reduction in income tax collections.
As the West Virginia Center for Budget & Policy has noted, because the sales tax increase would take effect on July 1, while the income tax cuts would not go into effect until 2018, the plan provides additional revenue for the 2017-18 budget, but ultimately results in a $70 million a year revenue shortfall — a budget deficit that supporters of the income tax cuts contend can be made up through growth in the economy.
Justice also is proposing an increase in tax credits available for restoring historic buildings, reviving legislation that failed to pass in the regular session.
n A bill to increase the state gasoline tax and various Division of Motor Vehicles fees to raise about $130 million a year for road construction and maintenance. Justice wants to use that revenue stream to underwrite part of the $2.4 billion in road bonds he wants to sell as part of a major highways and transportation initiative that he has said will create 48,000 jobs.
Casey has said the road bonds are integral to the overall revenue plan, since the income tax cuts are not feasible without the economic stimulus the road construction package would provide.
“If you don’t do the roads, then don’t do any of this stuff, because you’re dead,” Casey said. “You won’t have the catalyst for growth.”
Both road-funding proposals passed the Senate in the regular session but were never considered by the House Finance Committee.
Justice also is reintroducing legislation authorizing the state Parkways Authority to issue road bonds to be funded by continuing tolls on the West Virginia Turnpike, as well as any future toll roads in the state, a measure that also passed the Senate but was not considered in the House.
n A 2 percent pay raise for classroom teachers. During the regular session, legislators balked at the $21 million a year price tag for the increase, which Justice has said is vital, noting that low salaries make it difficult for school systems to recruit and retain teachers.
It is expected that the Senate will take up the revenue measures first, a strategy intended to put pressure on members of the House to support the plans.
As Carmichael noted Wednesday, indications are that there is general support for the revenue plan among the Justice administration, Senate Republicans, Senate Democrats, and House Democrats — with House Republicans being the exception.
Because members receive per-day pay and expense payments during special sessions, each day the Legislature meets in special session costs slightly more than $35,000.
Not included in the governor’s special session call was any legislation to fix a mistake in which lawmakers approved an easing of water pollution rules and then removed that same change when it passed a second bill sought by the coal industry.
“The governor wants the Legislature 100 percent focused on the budget,” Justice spokesman Grant Herring said.
The first bill, pushed by the West Virginia Manufacturers Association, would have allowed increased discharges of pollution into the state’s rivers and streams by switching from the use of a low-flow figure to an average-flow figure when calculating water pollution permit limits. The second bill merged several state mine safety boards and helped coal companies avoid lawsuits over stream contamination cleanup. But the second bill inadvertently rewrote the section of the law on water pollution permit calculations, returning it to the original language that existed before this year’s session.
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