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GOP announces plan that cuts $390M from existing WV budget

By PHIL KABLER

Charleston Gazette-Mail

CHARLESTON, W.Va. — West Virginia’s legislative leaders on Monday unveiled what they call the framework for their 2017-18 general revenue budget alternative, a budget capped at $4.055 billion — about $390 million less than the current state budget and $445 million below Gov. Jim Justice’s budget plan.

West Virginia Senate President Mitch Carmichael, R-Jackson (left), and House Speaker Tim Armstead, R-Kanawha, address reporters during a Statehouse news conference announcing the Legislature’s approach to the state budget crisis.
(Photo by Sam Owens)

The proposal would require cuts to areas that have been spared major reductions in the past, including K-12 public education and programs in the Department of Health and Human Resources, along with additional cuts to higher education, they said.

“What you have before you is a group of legislators willing to make the tough decisions, and go into areas that have, [for] too long, been off-limits,” Senate President Mitch Carmichael, R-Jackson, said during an announcement where he and House Speaker Tim Armstead, R-Kanawha, were joined by many other Republican legislators.

“We have avoided going into the three big areas that effectively constitute roughly three-quarters of the general revenue budget,” Armstead said. “We believe there are very responsible ways we can go into those funds and make reductions.”

Armstead suggested Monday that could involve $50 million to $60 million in public education spending cuts, but he said $10 million to $15 million of that would be in cuts to a “top-heavy bureaucracy” while giving flexibility to school systems to help cushion possible cuts in the School Aid Formula.

Likewise, Carmichael said the plan is to give state agencies flexibility in determining how to best spend their reduced appropriations.

“We’re not telling an agency to get rid of someone. What we’re saying is, ‘Here’s the amount of money you have to live within,’ ” Carmichael said.

Under pressure from Justice to present a budget counterproposal — the governor held a news conference Thursday beside his legislative countdown-clock display at the Capitol to decry the lack of legislative action — leadership did not unveil its budget bill Monday, but instead offered a “framework” to cut state general revenue spending back to $4.055 billion.

That creates a $445 million chasm between the budget proposals, setting the stage for a potential impasse between the Legislature and the governor.

In a statement Monday, Justice sounded unimpressed with the legislative plan.

“Bless their hearts, but the Legislature’s framework will not save the patient. What we saw today from the House and Senate only kicks the can around the block,” Justice said. “It doesn’t give our classroom teachers a pay raise, it doesn’t increase tourism advertising, it doesn’t bring jobs, and it lacks the tools to jump start our economy.”

During their announcement, legislators produced a handout showing about $278 million in cuts from Justice’s budget plan, primarily through not funding the governor’s “Save Our State” economic development fund, to cut $105 million (Justice has since requested $35 million for that fund for the upcoming budget year), and by not giving a 2 percent pay raise to classroom teachers, to avoid a $21 million spending increase.

The plan also adopts three Justice administration cost-saving proposals, including “smoothing” contributions to the Teachers Retirement System, redirecting Workers’ Comp old fund liability payments and not transferring general revenue funds to the Division of Highways, to save a total of about $92 million.

Additionally, the legislative plan includes Justice’s proposals to raise the beer tax and increase the wholesale markup on liquor, to raise $5.6 million — but would use that revenue to close the budget shortfall. Justice’s budget would use that money to enhance what he has said is a woefully inadequate tourism advertising budget.

The only cuts to the current budget outlined in the legislative handout are elimination of greyhound racing purse fund subsidies, to save $15 million, and elimination of a $9 million matching fund that allows state racetrack casinos to upgrade their gaming areas.

Last year, legislators proposed, but failed to enact, similar cuts.

At the news conference, the legislators repeatedly stressed their belief that state government must live within its means, as well as their opposition to raise any taxes.

“We must do what every family in West Virginia must do every year: Spend no more than you have,” Carmichael said.

The legislative plan to sharply cut spending is at odds with Justice’s belief that the government must invest in economic development and infrastructure to grow the economy, which he believes is the only way to pull West Virginia out of what he has described as an economic death spiral.

Armstead, however, said Monday that “spending $4.5 billion with the idea that, somehow, that creates jobs and prosperity has already been debunked, time and time again.”

He blamed the “war on coal” for the downturn in the state’s economy, and disputed claims that nearly $300 million a year in business tax cuts enacted since 2008 have contributed to the ongoing budget shortfall while failing to spur intended economic growth.

“The idea that, somehow, those tax reductions did not help is wrong,” Armstead said. “I think they have helped businesses weather the storm a little better.”

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