By Phil Kabler
The Charleston Gazette-Mai
Last week at the Capitol brought a fascinating juxtaposition. First, Commerce Secretary Woody Thrasher brought in some national site selection pros to explain what factors come into play when companies are looking for new business locations.
They didn’t reveal any top corporate secrets in outlining company priorities, which included availability of skilled labor, highway accessibility, quality of life, lease and construction costs, availability of facilities and sites, cost of labor, corporate tax rates, proximity to major markets, state and local incentives, and energy availability and cost.
They also made it abundantly clear that, in those areas that government can have influence, West Virginia is woefully lacking compared to the neighboring states that it competes with for economic development: lack of trained workers, poor roads and transportation, epidemic drug abuse, limited availability of suitable business sites, anemic budget for marketing and recruiting
In a nutshell, the consultants made the administration’s argument that this is the time that state government needs to be investing, not cutting.
Later that day, legislative leaders unveiled, not so much their long-awaited alternative budget, but a declaration to cap 2017-18 general revenue spending at $4.05 billion, which would require cutting about $390 million from the current budget plan.
When I talked to Gov. Jim Justice Friday, he sounded frustrated that some legislators (including the example below) want to frame the debate as “raising taxes versus living within our means” as opposed to investing in the state versus continuing on a path to economic collapse.
As for budget negotiations with the Legislature, Justice said he believes there is a faction of legislative leadership that is on board with the concept of raising revenues in order to do the right things for the state, but he also said there a number of legislators who “feel like they’re on a mission from God above to cut.”
“They don’t realize when you just cut for the sake of having a scalp … that cut has a name tied to it, and a family tied to it,” Justice said.
Meanwhile, those dead-set on “right-sizing” government seem to ignore the impact of cuts in recent years in the neighborhood of 15 to 20 percent for many state agencies.
We’ve heard testimony this session that the Tax Department is probably leaving money on the table because shortages of auditors have left it unable to adequately audit tax returns, particularly for companies headquartered out-of-state. We’ve also heard how unfilled vacancies in the State Police forensic lab contributes to counties’ Regional Jail costs as trials are delayed awaiting test results.
I’m sure there are many more examples of how cutting agencies’ budgets to the point that they have difficulty functioning costs the state considerably more than they save.
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If I follow the leadership’s budget “framework,” they believe they need to cut $150 million of spending (looks to me like it’s closer to $267 million, compared to the current budget), with cuts coming one-third each from K-12 public education, higher education and the Department of Health and Human Resources.
Cutting $50 million each from those three, as proposed, seems to pick on higher education the hardest, cutting its budget by 12.5 percent, on top of $120 million of cuts absorbed since 2008, while the DHHR ($1.2 billion) and public education ($1.9 billion) operate with much larger base budgets.
Meanwhile, the leadership is probably too young to remember a 1988 state Supreme Court decision overturning the 1987-88 state budget as unconstitutional on the grounds it didn’t adequately fund public education.
That year, in the midst of the budget crisis of that time, the Legislature passed a budget that cut public education funding by $13.5 million (roughly $29.7 million in 2017 dollars). The court, in a 3-2 decision, ruled that the Legislature had failed to give top funding priority to public education, as required through the state Constitution’s mandate to provide a “thorough and efficient education system.”
The plaintiff in that suit was the West Virginia Education Association. Any odds on the likelihood that a $50 million cut to public education would spark another court challenge?
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Illustrating how talk is easy on spending cuts, but action is hard, Delegate Marty Gearhart, R-Mercer, gave a floor speech last week comparing state government to an obese person who, as I understood the speech, should be put on a starvation diet. (I don’t know if that was intended to be a barb at the governor, although Gearhart equated the governor’s budget plan to giving the bloated state government more to eat.)
Afterward, I’m told, Gearhart was asked if, in the spirit of his speech, he would consider consolidating Concord and Bluefield State in his district to reduce state spending, considering their close proximity, a request that reportedly went over like the proverbial lead balloon.
Asked about that conversation, Gearhart said, “Private conversations between two individuals are just that, private.”
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As the governor noted, there’s been a lot of misinformation spread about his budget plan.
The first misnomer is that Justice initially proposed $450 million in tax increases. Actually, his first proposal had $450 million in “revenue enhancements,” which included more than $50 million in funding transfers and the repeal of the Film Tax Credits.
Justice’s Budget 2.0 proposal, which he unveiled back on Feb. 27, would raise about $352 million in new taxes.
Senate President Mitch Carmichael, R-Jackson, has repeatedly called Justice’s budget plan the largest tax hike proposal in state history.
You only have to go back through 28 years of the state’s nearly 154-year history to find that Carmichael’s statement is wrong.
In 1989, the Legislature passed Gov. Gaston Caperton’s $392 million package of tax increases to get the state through that budget crisis. Not only is that $40 million larger than what Justice is proposing, but adjusted for inflation, that would be the equivalent of $763 million in today’s dollars.
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Finally, Barbara Thomas, state director for the Convention of States Action, sent letters to legislators urging support for an Article V convention of states to propose a balanced budget amendment to the U.S. Constitution.
Included with each was a list of individuals from each legislator’s district who supposedly signed a petition supporting said convention.
Delegate Mike Pushkin, D-Kanawha, looked over his list, and said he recognized one name — a woman he had dated — who moved out of state years ago.
Interestingly, the contact number listed in the letter for Thomas has a 904 area code (Jacksonville, Florida) and state co-director Rich Johnson’s number has a 703 area code (the Alexandria, Virginia area). Looks like an Astroturf coalition, doesn’t it?
(703 used to be our area code when I was growing up in wonderful south-side Virginia, until occupied Virginia stole it.)
Reach Phil Kabler at [email protected], 304 348-1220, or follow @PhilKabler on Twitter.