By Phil Kabler
For the West Virginia Press Association
Legislators ended the first week of a special session without a plan to close a $270 million funding gap in the 2016-17 state budget, but with assurances that both the House and Senate Finance committees will unveil their budget plans when the session resumes on Monday.
Both plans will rely on $78 million in new revenue from a bill to increase the state tobacco tax (SB1005) – a bill that barely passed the Senate Thursday on a 17-16 vote, and faces a tough battle in the House of Delegates.
Unable to resolve differences in the House and Senate versions of the budget bill, and with no agreement on how to close the funding shortfall, legislators left Charleston in mid-March without passing a budget bill.
Initially, Gov. Earl Ray Tomblin had said he would not call a special session until there was an agreement on the budget bill.
However, as the budget impasse passed the 60-day mark, and with a July 1 shutdown of state government looming if the budget is not passed, Tomblin called legislators into special session on May 16 to hammer out a compromise.
“We acknowledge we have not been able to come to an agreement, but the governor feels we need to do everything we can to address the uncertainty on the budget,” Tomblin spokesman Chris Stadelman said at the start of the special session.
In his special session call, Tomblin asked legislators to consider some combination of three tax proposals to raise revenue: A 45-cent tax increase on cigarettes, with increases on other tobacco products and a new tax on electronic cigarettes; a repeal of the sales tax exemption for telecommunications services, primarily cellphone and land-line telephones; and an increase in the consumer sales tax of up to one percent.
Two of the options were non-starters, as Senate President Bill Cole, R-Mercer, had his name removed as cosponsor of the sales tax and telecommunications bill.
“I’m not about tax increases,” Cole, the Republican nominee for governor, said of removing his name from the bills. “The one that has a reasonable chance is the tobacco tax.”
The Senate took the lead on the tobacco tax bill (SB1005), leading up to the most dramatic moment of the first week of the special session.
Senate Finance Committee on Tuesday advanced the bill after rejecting an amendment by Senate Democrats to raise the cigarette tax hike from 55 cents a pack to $1.
Democrats argued the higher tax would not only raise some $122 million a year to close the funding gap – compared to about $78 million a year for the 45-cent tax plan – but would be a more effective deterrent to smoking.
However, Senate Republicans countered that the tobacco tax faces a tough battle in the House, where a similar proposal was crushed by a 3-22 margin of defeat in House Finance Committee during the regular session.
As Sen. Chris Walters, R-Putnam, noted, “A vote for a dollar this time will be almost certain death for the tobacco tax when it gets to the House…That’s the reality of where we’re at: 45 keeps it alive.”
Controversy over the bill heightened on Wednesday, when Senate Health and Human Resources Chairman Ryan Ferns, R-Ohio, tried to amend the bill to exempt smokeless tobacco products from the tax increase, a proposal that drew loud objections.
“If you vote green, you’re voting for Big Tobacco,” Senate Minority Leader Jeff Kessler, D-Marshall, said. “ If you vote red, you’re voting for the health and welfare of the people of West Virginia, and our children.”
Ultimately, Ferns withdrew the amendment after Sen. Tom Takubo, R-Kanawha, a pulmonary physician, told senators he could not support it.
That led up to the passage vote on Thursday, when 15 of 16 Senate Democrats voted against the bill, in a show of support for a $1 increase.
The bill passed on a narrow 17-16 vote, but only because staunchly anti-tax Sen. Robert Karnes, R-Upshur, left the chambers shortly before the vote. He later claimed he went to the restroom anticipating a lengthier debate on the bill.
The tobacco tax bill, a key funding component for both the House and Senate versions of the 2016-17 budget, is set to be up for a passage vote in the House on Tuesday, where leadership will be trying to hold together what is believed to be a razor-thin 51 votes in favor of the measure.
“A lot depends on that vote on Tuesday,” said House Finance Chairman Eric Nelson, R-Kanawha.
Meanwhile, Delegate Isaac Sponaugle, D-Pendleton, decried what he saw as unproductive week in the House.
“We had a pretty worthless week down here. We have spent $175,000 and we have yet to cast a single vote in this body,” he complained, referring to the roughly $35,000 a day cost for legislative pay and expenses in special session.
House and Senate Finance committees spent the week conducting budget hearings with state officials and agency heads, meetings committee members said Friday were productive in uncovering accounts that can be used to balance the budget.