By April 7, 2017 Read More →

WV House of Delegates approves budget, revenue bills

By RUSTY MARKS

The State Journal

CHARLESTON, W.Va. — Members of the West Virginia House of Delegates passed a budget bill Wednesday, April 5 following more than three hours of sometimes heated debate.

Delegate Eric Nelson, R-Kanawha, chairman of the House Finance Committee, said the original general revenue budget proposed by Gov. Jim Justice came in at $4.5 billion, but only included about $4.055 billion in revenue. Nelson said the bill crafted by the finance committee came in at about $4.2 billion, $60 million less than the current budget and about $150 million less than the year before.

“We had very tough choices, and we’ve been in uncharted territory,” Nelson said in explaining the budget proposal. Nelson said the budget includes: $75 million in new cuts, the continuation of a 2 percent mid-year budget cut ordered by former Gov. Earl Ray Tomblin before leaving office, almost $192 million in new revenue or sweeps from other accounts and about $186 million realized by eliminating a proposed 2 percent teacher pay raise, not funding increases to the Public Employees Insurance Agency, public defenders services, the state tax department and other agencies and smoothing out payments for teacher pensions.

But Nelson said the budget proposal did not require dipping into the state’s dwindling rainy day fund, and was far kinder to higher education that a budget bill passed by the Senate on Wednesday. That bill would cut funding for higher education by about $160 million, or about 15 percent.

Cuts proposed in the House budget would amount to about 6 percent for West Virginia’s four-year colleges, and about 5 percent for community and technical colleges, Nelson said. Authority to dole out funding for higher education would be passed to the state Higher Education Policy Council and Council for Community and Technical Colleges.

Turning over control of higher education funding to two non-elected boards proved to be the major sticking point of the House budget proposal. Delegate Larry Rowe, D-Kanawha, along with several other delegates worried turning over the purse strings to the councils would open the funding process up to favoritism.

Three lawyers, Delegate Andrew Byrd, D-Kanawha, Delegate Justin Marcum, D-Lincoln, and Delegate Barbara Fleischauer, D-Monongalia, warned that the college funding portion of the budget bill was unconstitutional, because the higher education councils did not have the constitutional authority to fund schools. Fleischauer said state code specified that Marshall University and West Virginia University were given the authority to do their own budgets.

Even many of those who opposed the House budget bill thanked Nelson, the finance committee and committee staff for the hard work they put into the plan. The budget bill passed by a vote of 58-42.

Earlier Wednesday, a tax reform bill that was a key component of the House budget plan passed by an even narrower margin of 52-48. The legislation, Senate Bill 484, was originally passed by the Senate but significantly altered in the House finance committee.

As approved, the bill would remove several exemptions from the state sales tax, but gradually lower the overall tax rate. Under the bill, the sales tax rate would drop from 6 percent to 5.5 percent on July 1, 2018, to 5.25 percent the next year, then to 5 percent and 4.75 percent if certain revenue triggers were met.

Broadening the tax base would bring in an extra $140 million in revenue for the upcoming fiscal year’s budget. But Deputy Revenue Secretary Mark Muchow told committee members revenue would only be $60 million next year, and that the tax rate decreases would end up costing the state more than $100 million a year by the time the decreases were fully implemented.

Proponents of the rate reduction, like Delegate Eric Householder, R-Berkeley, who is vice-chairman of the finance committee, think that won’t happen, believing that lowering the sales tax wouldl give West Virginia a competitive advantage over its neighbors. More than 30 of the Mountain State’s 55 counties share a border with another state.

Delegates argued sharply over the effect of the bill on state residents.

“This is a tax bill, plain and simple,” said Delegate Isaac Sponaugle, D-Pendleton. “You’re nickeling and diming every consumer in West Virginia.”

Opponents of the bill called it a tax increase, because the bill would tax services that people have never paid tax on before. Those in favor of the legislation said it was a tax cut, because the overall tax rate would go down over time.

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