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Budget talks diverge as WV special session continues

By PHIL KABLER

Charleston Gazette-Mail

CHARLESTON, W.Va. — With no agreement on any options to raise additional revenue to close the 2017-18 budget shortfall, the House of Delegates and Senate wrangled Wednesday with different variations of a $4.225 billion West Virginia budget plan.

Gov. Jim Justice expressed his objection to both options Wednesday and suggested he would veto either bill — if there is time left to work on an alternative.

Gov. Jim Justice expressed objection to both variations on budget bills from West Virginia House and Senate.
(WV Legislature photo)

The House advanced a plan Wednesday that smooths some of the sharp edges in a Senate bill that would impose about $67 million in additional spending cuts targeting higher education, particularly Marshall and West Virginia universities, and Medicaid funding (SB 1013).

Advanced on a 69-30 vote, the House option shifts about $52 million in funds from a variety of sources to lessen those cuts — including raiding $12 million from a reserve fund controlled by the Senate.

“What we’ve heard from the Senate is, ‘Live within your means.’ This does that,” House Finance Chairman Eric Nelson, R-Kanawha, said.

House Speaker Tim Armstead, R-Kanawha, called the House proposal a “responsible budget” that would assure continuation of government operations and avoid a partial government shutdown on July 1.

“We’re talking about the governor’s revenue estimate of $4.225 billion, and this budget spends that in a very responsible way,” Armstead said. “It has cuts that I think are responsible cuts.”

“June 30 is upon us,” Nelson told the House, urging the Senate and governor to concur on the proposal. “What does the bill do? It’s certainty. It’s certainty to the citizens of the state. Certainty to businesses and certainty to our many thousands of state employees.”

Overall, either version of the latest plan cuts spending by about $135 million from the current 2016-17 general revenue budget.

The Senate Wednesday evening deferred action on the House plan, in part because it relies on revenue created from passage of two Justice bills to raise revenue for road construction — bills that have passed the Senate but are pending in the House.

Justice on Tuesday increased the administration’s revenue estimate for 2017-18 by $170 million, in part on projections of economic upturns. However, that increase assumes economic stimulus from bills to raise about $130 million a year in new funding for the state Road Fund — revenue that will be used to pay off up to $2.8 billion in road bonds.

Senate Majority Leader Ryan Ferns, R-Ohio, voiced concern that the $52 million the House would use to soften proposed cuts in the Senate version of the budget consists of one-time funds.

“As we know, that one-time money doesn’t do much for creating structural stability in the long-term budget,” he said.

Senate President Mitch Carmichael, R-Jackson, said the Senate on Thursday will probably concur on the House bill with further amendment — once the House passes the road funding bills.

Both houses were pushed to work on their Plan B’s after Senate Republicans on a House-Senate conference committee refused Tuesday to sign a committee report for a revenue plan that would raise about $62 million in new revenue by eliminating certain sales tax exemptions — a proposal that excluded income tax cuts that Senate leadership had strongly advocated for.

When the conference committee collapsed, the Senate passed, on a party-line 22-12 vote Tuesday evening, their version of the budget plan, targeting cuts for higher education and Medicaid totaling $67 million beyond spending cuts in the administration’s base budget.

“The Senate is just trying to extract revenge from us because we didn’t like part of their plan,” said Delegate Charlotte Lane, R-Kanawha, referring to broad opposition in the House to the Senate Republicans’ plan to increase sales taxes to produce sufficient new revenue to enact the income tax cuts.

Delegate Brent Boggs, D-Braxton, one of the House members on that conference committee, complained that both houses are “on a path of mutually assured destruction,” with no resolution to the systemic revenue problems that are causing budget shortfalls year after year.

Delegate Isaac Sponaugle, D-Pendleton, was less diplomatic, calling the 18 days to date in special session “a total disaster.”

“We’re using smoke and mirrors to pass a bunch of garbage out so we don’t shut the state down,” he said.

Meanwhile, Justice met individually with members of the Capitol press corps Wednesday to lament the apparent demise of his budget plan, a proposal he said would have “accomplished everything that everyone wanted without hurting people.”

Justice said he wants the Legislature to “quit playing games” and reconsider his plan, to avoid what he called the “carnage” of either alternative budget plan.

Justice is expected to make one last push Thursday to sell his proposal to raise the state sales tax while lowering income taxes and setting up a tiered severance tax system — despite overwhelming opposition to the income tax cuts in the House.

“The personal income tax reform is not going to happen this year,” Armstead said, adding, “The support just isn’t here, and that isn’t going to change this session. It’s fruitless, and it wastes money and time.”

Asked what action he will take if either the House or Senate version of the budget bill reaches his desk, Justice said, “It depends on when it shows up. If it shows up today, I veto it because we’ve got plenty of time to work something out. If it shows up two days before the shut-down deadline, and we don’t have enough time to work stuff out, you’d have to make a really tough decision at that point.”

Wednesday marked the 18th day of the special session on revenue and the state budget, with legislators meeting on and off since May 4, with 16 days left before a partial government shutdown if the budget is not enacted by July 1, although legislators have warned that delays in payroll and vendor payments are possible if the budget is not approved by June 19.

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