By PHIL KABLER
Charleston Gazette-Mail
CHARLESTON, W.Va. — Day 11 of the special session of the West Virginia Legislature on the 2017-18 state budget was highlighted by a nearly three-hour closed-door meeting between Gov. Jim Justice and House Democrats, a meeting where the governor implored Democrats to support his budget plan.
(Photo by F. Brian Ferguson)
“The governor came in and made his case for why the most recent plan that he’s presented is the plan to go with, and be adopted and embraced,” Senate Minority Leader Tim Miley, D-Harrison, said following the House Democrat caucus. “His main concern is the roads plan, and to make sure there’s funding for it.”
Legislators reconvened the special session Monday, after taking a 12-day break, returning to Charleston with 25 days remaining before the new budget year begins July 1 — a date that would see a shutdown of non-essential state services if the budget is not enacted by then.
“To me, I want to be out as soon as we can, and it better be before June 30,” House Finance Chairman Eric Nelson, R-Kanawha, said Monday. “We’ve got to put on some big-boy pants.”
The House Finance Committee is scheduled to meet this morning to resume work on the revenue plan — contingent on House Democrats reaching a consensus, following the extended meeting with the governor, and a caucus that resumed Monday afternoon, Nelson said.
Miley said Democrats raised questions about the governor’s latest proposals, including plans to use economic triggers to reduce state income tax rates, as well as a proposal to eliminate a sales tax exemption for contracting services.
Democrats resumed their caucus Monday afternoon to discuss “concerns and conditions” on Justice’s revenue proposal, Miley said.
The latest proposal by Justice and Senate Republicans would reduce income tax rates by 7 percent in 2018, and by 7 percent and 6 percent in subsequent years, if yet-to-be-determined economic triggers are reached. At one point earlier in negotiations, the trigger was to be a $110-million growth in general revenue collections.
Miley said Democrats want to be sure the triggers are not too low, to avoid blowing a $300 million hole in future budgets without sufficient growth in jobs and the economy to make up for the revenue cuts.
He said the caucus also wants to see reverse triggers that would roll back the income tax reductions, if those cuts fail to generate the promised growth in jobs and the economy — as has occurred Kansas and Oklahoma.
Miley said House Democrats also raised concerns about the proposed increase in the state sales tax to 6.35 percent, as well as a proposed elimination of a sales tax exemption for contracting services.
Currently, contractors do not have to collect sales taxes for the cost of labor on construction projects.
Eliminating that exemption would raise about $92 million a year — but at the expense of businesses building new facilities, as well as homeowners making home improvements, Miley said.
He said Justice on Monday proposed exempting the first $15,000 in labor costs, which should exempt most home improvement projects, while raising $72 million a year.
Miley said he’s not certain that House or Senate Republicans will support repealing the exemption, even with that change.
“Are we just adding to the bottom line of the cost to a business of building a new facility?” he said.
Miley said Justice re-emphasized the importance of passing his road-building proposals. Justice wants to increase the gasoline tax and various Division of Motor Vehicles fees, and to continue and raise tolls on the West Virginia Turnpike, to finance up to $2.8 billion in bonds for highway construction — which he views as economic stimulus and vitally needed for the state’s deteriorating transportation system.
“His main concern is the roads plan, to make sure there’s funding for it, so we can see some economic impact from that and, of course, improve the roads,” Miley said.
Nelson said he anticipates taking up the revenue proposal, the budget bill, and the roads bills, in that order — contingent on House Democrats reaching consensus.
Although Democrats account for just 36 of the 100 House seats, their support could be critical to offset those House Republicans who are committed to vote against any plan that increases taxes.
“It all depends on what comes out of the Democrat caucus,” he said. “If they’re not on board, then we’re back to the drawing board.”
Nelson said that could mean going back to the revenue plan the House passed back on May 19, which had no sales tax increase or income tax cuts, and raised about $100 million in new revenue by “broadening” the sales tax base, largely by eliminating an exemption for telecommunications services — primarily cellphone plans — that would raise $60 million a year.
However, that plan would come up more than $100 million short of funding the $4.36 billion 2017-18 budget Justice has proposed.
Nelson said he is encouraged that lines of communication are open, and that the governor has listened to concerns from legislators and incorporated changes into his revenue plan.
Nelson said of the current plan, “It has a little bit of something for everybody, and something everybody can dislike.”
Meanwhile, the Senate met just briefly Monday, with just two members, to adjourn the floor session until today.
Senate President Mitch Carmichael, R-Jackson, reiterated Monday that senators are willing to consider any compromise that will avoid a partial government shutdown on July 1.
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