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Editorial: State’s leaders must negotiate, find a realistic budget solution

From the Times West Virginian of Fairmont:

It’s time for West Virginia’s leaders to seriously negotiate and come up with a realistic solution regarding the state’s budget.

The Legislature passed House Bill 2018, or the budget bill, Sunday morning. Gov. Jim Justice, though, announced Thursday afternoon that he would veto the bill.

There were hopes last weekend of a budget deal in a state facing a deficit of about $500 million for the next fiscal year.

As the legislative session neared its end Saturday, Justice announced a deal reached with Senate President Mitch Carmichael.

Justice said the potential budget included an increase in consumer sales tax, a “rich man’s tax,” a .00045 Commercial Activities Tax, a 4.5 cent gas tax, a 2 percent teacher pay raise and room in the Save Our State fund to market the state. The bill also included the governor’s proposed roads project money.

Justice said it also called for taking steps to eliminate personal income tax.

However, members of the House said they didn’t know of the deal until the governor’s press conference Saturday night, and things fell apart.

The budget passed early Sunday morning includes $4.1 billion in general revenue spending and about $90 million in cuts.

It takes $29 million from higher education, representing 8 percent cuts to Marshall and West Virginia universities, a 2 percent cut to West Virginia State University and Blue Ridge Community Technical College, and 4 percent cuts to all other state higher education institutions. This translates to about 1 to 2 percent reductions to overall budgets in higher education.

There also is a $48 million cut to the Department of Health and Human Resource’s Bureau for Medical Services. Factoring in the federal match, that reduction in state money could potentially be an up to $200 million cut to the department.

It also takes about $90 million from the Rainy Day Fund.

That’s a major concern.

“When West Virginia gets its bond rating, the agencies like to see 15 percent in general revenue in reserves. It helps the state’s bond rating and makes it cheaper to build roads, schools and all the other things the state has to borrow money to do. Taking $90 million will drop us to around 13 percent and will result in a negative impact and make things more expensive down the road,” said Sean O’Leary, senior policy analyst with the West Virginia Center for Budget and Policy.

Significant cuts to education, which generates money and is critical for the state’s move toward a more diversified economy, and programs helping poorer West Virginians are also troubling.

“Many indicators of what West Virginia needs to prosper is to improve the workforce, improve infrastructure and get more college graduates. … This makes education harder to attain. It makes it harder to get a college degree. It makes it harder to get healthy and more expensive to get health care,” O’Leary said.

Bringing in additional funds, as well as cuts, must be a part of the final package.

Justice has said asking wealthier West Virginians to pay a higher income tax is “symbolic more than anything.”

For West Virginian’s making more than $200,000, they will be required to pay $500 more a year; for those making more than $250,000, they will have to pay an additional $750; and for those making more than $300,000, they will have to pay $1,000.

“You ought to be able to pay $1,000 and not even know that it’s gone,” Justice said.

This tax, along with a business tax called Commercial Activities Tax, would greatly help the state, Justice said. The governor noted the business tax could bring $45 million.

State Chamber of Commerce President Steve Roberts said business wants to be part of the solution to the state’s budget crisis, and considers Justice’s proposed 0.045 percent gross receipts tax to be the best alternative to raise revenue.

“We don’t expect a free ride. We expect a fair ride,” Roberts said.

It was wrong that the House was not involved in the potential deal last weekend.

“What happened to them with knowledge of this wasn’t fair,” Carmichael said. “It was not nefarious but we just didn’t have a chance.”

Moving forward, that must be corrected — just like the problems in the budget bill passed by the Legislature.

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