By LACIE PIERSON
CHARLESTON, W.Va. — With 18 days to go before the start of fiscal year 2018, Gov. Jim Justice on Monday told lawmakers “it’s time to vote” on revenue and budget measures to avoid a government shutdown and further spending of taxpayer money.
The governor also presented three new revenue plans during a news conference in the Governor’s Executive Meeting Room, where he told media the plans were devised last weekend during a two-hour-long meeting with Senate President Mitch Carmichael, R-Jackson, and House of Delegates Speaker Tim Armstead, R-Kanawha.
The governor’s plans were posed to Democrats and Republicans during their respective caucus meetings Monday, but none of the plans introduced was brought to a vote in either legislative chamber Monday.
“This is a moving target all the time here, that’s for sure,” Justice said. “I think it’s incumbent on us all to take action. This business of us being down here on the taxpayers’ dime is no good. It’s just no good.”
Two of the three plans Justice outlined Monday didn’t reflect a tentative agreement Justice and legislative leaders had regarding the actual amount of money that would be spent to operate government, $4.35 billion.
In his office Saturday, Justice said he, Armstead and Carmichael discussed what would happen if House Bill 107 failed, and the results were what Justice referred to as the “Justice Plan,” the “Carmichael Plan” and the “Armstead Plan.”
House Bill 107 is in the hands of a 10-member conference committee, with members from both chambers representing their respective interests. The committee’s deadline to submit a report, which would be a draft version of the bill that reflects their compromise, is Tuesday.
The committee spent its 10-minute meeting on Monday hearing about the details of Justice’s and Armstead’s plans.
The subject of a near stalemate between the legislative bodies and committee members is the reduction and restructuring of the state’s personal income tax, which the GOP Senate majority members and Justice support, but Senate Democrats and House members in both parties oppose.
Justice said Carmichael’s response to losing HB 107 would be to draft a budget that uses $4.1 billion to operate state government, which would require $270 million worth of cuts to existing state government and government-supported systems.
Justice also plugged in $100 million in estimated revenue for the Carmichael Plan, and Justice said Carmichael’s plan still would require $170 million in cuts to existing state government operations.
“Mitch said they don’t want to do this, but this is the only place they have to turn,” Justice said.
The plan Justice said was Armstead’s plan sticks to House Republican majority leaders’ philosophy to broaden the state’s tax base.
The Armstead plan would keep the sales tax at 6 percent, but it removes the same sales tax emptions that are removed in House Bill 107.
Those goods an services that would become subject to the sales tax in the Armstead plan are telecommunications, digital goods and services, health and fitness services and memberships, primary opinion research, communications, except for the expansion of broadband services. Armstead’s plan also applies the sales tax to direct use transportation, except for hauling coal, a provision not included in HB 107.
The Armstead alternative also included eliminating the income tax on Social Security income for households making less than $100,000. That would happen over the course of three years.
It also would require a 2 percent cut in state funding to both Marshall University and West Virginia University.
Armstead’s plan also would require additional yet-to-be-determined cuts to state government to total between $40 million and $70 million.
It also would increase the personal annual tax exemption from $2,000 to $2,500.
Following the House’s afternoon session, Armstead said he was willing to work with the Senate and Justice to get them on board with it, but he wouldn’t block Justice’s plan, if it had traction in the House.
Justice’s plan included most of the provisions that currently exist in House Bill 107, which is in the hands of a joint conference committee, which includes five Senators and five Delegates, who are working to come to a compromise.
Justice’s plan differs some from House Bill107 in that the current bill puts the state sales tax at 6.5 percent, and Justice’s plan puts it at 6.35 percent.
The plan Justice presented Monday also includes the sales tax exemptions in Armstead’s plan, but his plan also includes restructuring the coal severance tax plan based on the type and quantity of coal mined, which is expected to cause the state to lose $37.4 million in revenue for fiscal year 2018.
It also includes eliminating income taxes on Social Security income for households making less than $100,000 annually and for military retirement income.
As it translates to the budget, Justice said his plan would prevent any cuts to Marshall University or West Virginia University and would support a 2 percent pay increase for classroom teachers.
Justice’s plan also begins to address the income tax reduction matter by using the plan from House Finance Committee Chairman Eric Nelson, R-Kanawha, to make sure the state’s finances are in order before the tax is reduced.
The conference committee for HB 107 heard three plans last week to trigger the income tax decrease: One from the Senate, one from Justice, and Nelson’s from the House.
In HB 107, the income tax would be reduced by 7 percent on Jan. 1, 2018. It would subsequently be reduced by another 7 percent if certain budget thresholds are met, and a third decrease of 6 percent would take place if another set of economic events took place.
The scenario laid out in Nelson’s plan relies on a formula using the 5-year average growth of personal income tax revenue and sales tax revenue. That rate would be multiplied by the general revenue collections of the most recent fiscal year, minus any Rainy Day Funds used to balance the budget that year, to establish the first part of the formula.
Then, the state’s tax commissioner would calculate the amount of money it would cost the state if the 7 percent cut would go into effect.
The cost of the cut would be subtracted from the number in the first part of the formula.
If the resulting number reflects growth, the trigger on the income tax reduction would be pulled.
Monday was the 16th day of the first special session of the 83rd West Virginia Legislature.
Fiscal year 2018 begins July 1, 2017, and the state government would shut down, except for essential services, if a budget isn’t passed.
The cost for the legislative session is $35,000 per day if every lawmaker is present in both chambers when both legislative bodies convene.
The conference committee will reconvene at 9 a.m. today in the House Finance Committee meeting room.
The Senate will reconvene at 11 a.m. today, and the House will reconvene at 11 a.m. today.
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