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Governor’s chief of staff: budget talks progressing


The Register-Herald

CHARLESTON, W.Va.  — Gov. Jim Justice’s chief of staff says he is “cautiously optimistic” with budget talks between House and Senate leaders, saying discussions have progressed and are focused on a reduction in personal income taxes and broadening the tax base.

In a Wednesday phone interview, Nick Casey said House Speaker Tim Armstead has been part of the process.

“This was a very positive meeting,” Casey said. “What appears to be occurring is that the Senate and House are talking to each other which is good.”

Last week, after the House voted to reject the first tax bill, the Senate reworked Senate Bill 1004 before passing it on a 32-1 margin with one Senator absent.

Over in the House, following a brief debate on a failed motion to send the bill to the House Committee on Finance, the House rejected the bill on a 59-34 vote. The two bodies adopted a resolution to adjourn until May 15. Leadership teams from both chambers have met to discuss the bill within this last week.

The Legislature goes back into session on Monday to try to pass a budget bill.

In the Senate’s reworked tax bill, there were some changes to triggering events to lower personal income tax and with tiering of the state’s severance tax. The bill added another tax bracket for those making more than $300,000 a year.

Casey said talks have focused on revenue measures, broadening the base of the sales tax, a “wealthy West Virginian tax” in the form of the additional tax bracket and a reduction in the personal income tax.

He said the House and Senate have made technical inquiries regarding broadening the base and a direct use tax, which he said Gov. Jim Justice isn’t keen on but does want to hear ideas.

Casey said the Senate and the House have two different philosophical approaches, especially when it comes to tax measures.

“I’m cautiously optimistic about what’s going on,” he said. “The big conversation between the House and the Senate is philosophical. The Senate is interested in tax reform which manifested itself in a phase out reduction of personal income tax, which other states have done and had success in seeing more activities and generating more revenue. The House, on the other side, doesn’t like that so much and they like dealing with consumer sales tax. … We are working with that with each other to see which approach to take or a balance of the two together.”

He said it’s not as simple as changing the consumer sales tax by a certain amount and reducing personal income tax in accordance with that amount. He said there is a way to balance these two but it could mean a slowed down reduction of the personal income tax. Under the previous bill, the reduction was set to begin in January.

This wouldn’t necessarily preclude broadening the base of the sales tax. Casey said there are few areas of exemptions that could be looked into such as broadening the base to include telecommunications.

“This could relieve the necessity to increase the consumer sales tax by 1 percent,” he said. “If you broaden the base, it can go lower. It’s the same with the income tax. If you phase in the income tax reduction instead of doing it all the first year, it makes it easier mathematically to say, with a large drop off, you either have to replace it now with a consumer sales tax or make it simpler. We are hoping to get meetings of the minds on how they want to proceed.”

Another aspect of the budget is the governor’s roads project, which Casey said he hopes will be included.

“If we don’t do the roads project along with the budget, we might as well not do the budget,” he said. “If we balance for next year, that’s great but we’re doomed the year after that without the road project. As the governor has said, we’re dead. There is no decoupling from the governor’s perspective. Balancing the budget in 2018 is fine but without the roads jobs, pack it up, we are done.”

Last week, the Senate referred three bills — Senate Bill 1001, increasing salaries for classroom teachers; SB 1002, increasing DMV fees and motor fuel and SB 1003, relating to the Parkways Authority — to the Committee on Rules. Casey said he hopes the House will seriously consider the roads bills.

“The governor is for it and the Senate is for it,” he said. “The conversation has mostly been about the budget and we’ve made it clear in our communications that the budget exists as one factor of the big picture. The rest of the picture is the roads project.”

Casey said he hopes to get feedback by the end of the week so they can run the numbers and make the budget balance.

Procedurally what would happen then is another revenue bill would be introduced in either chamber, he said. Casey said his sense is the governor’s office would prepare the revenue bill, have both houses look it over and vote on it. If it’s passed, then it would be put in the budget bill.

He said conversations have improved, but despite conversations between the House and the Senate, state revenues continue to miss budget projections.

“The finances are awful,” Casey said. “They’re just awful.”

The state, Casey said, is facing a $500 million deficit next year, $600 million the year after next and an $800 million hole in the thrid year out.

“That’s the 800 pound gorilla in the room,” Casey said. “The gorilla will still be standing there unless you feed it.”

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