By PHIL KABLER
CHARLESTON, W.Va. — A day after saying he hoped negotiations would continue between Gov. Jim Justice and the Legislature on a budget compromise, Senate President Mitch Carmichael changed direction, calling on the governor Tuesday to sign the $4.102 billion budget bill lawmakers passed Sunday.
“While I realize this budget is not what the governor wants, I believe it’s a budget that is rooted in reality,” Carmichael said in a statement Tuesday afternoon. “We cannot continue to spend taxpayer dollars at the same level while our revenue collections decrease.”
Carmichael, R-Jackson, was involved in negotiations with Justice on Saturday to come up with a budget that avoids major spending cuts and that incorporates a Senate proposal to raise revenue by increasing the sales tax by 1 percent, and setting a 3.5 percent sales tax on groceries, while lowering rates for income taxes and severance taxes on coal and natural gas.
Justice announced Saturday night that he was “on the cusp” of reaching an agreement, but House leadership refused to consider the plan, and both chambers instead hurriedly passed the $4.102 billion spending plan, which includes no new taxes and makes at least $160 million in cuts, mainly to higher education and Medicaid.
It also uses $90 million of Rainy Day emergency reserve funds to close the budget shortfall, something Justice has criticized as “kicking the can down the road.” It also drops the reserve funds below the 15 percent of general revenue threshold that rating agencies have said needs to be maintained to avoid additional downgrades of state bond ratings.
Additional Rainy Day funds might need to be tapped under the budget bill, which assumed that $15 million in funding would be available from the elimination of greyhound racing subsidies — in a bill that Justice vetoed — and $9 million would be available through elimination of racetrack modernization grants, a bill that passed the House but was not acted on in the Senate.
Having failed to pass tax reform measures, Carmichael said Justice should consider signing the budget bill into law and “begin utilizing the management skills of his team to control state spending.”
“I encourage Gov. Justice to sign this budget because I believe only then can we truly begin to have the conversation about the need for comprehensive tax reform,” Carmichael said. “If we do not fundamentally overhaul the current West Virginia tax structure, our state will continue to face annual budget problems.”
Asked to comment on Carmichael’s change of heart, Justice spokesman Grant Herring offered a one-sentence response: “Our office is still reviewing the budget.”
See more from the Charleston Gazette-Mail