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House, Senate leadership differ on governor’s budget framework


The Register-Herald

CHARLESTON, W.Va.  — With a special session coming up next week to deal with the budget, Senate President Mitch Carmichael said he thinks the governor’s proposed framework will help residents.

However, House leadership expressed in an earlier news release that the framework does not have support from a majority of members.

In a Wednesday press conference, Gov. Jim Justice announced the special session will start May 4 to deal with the budget. He said he hopes to be on the cusp of a budget that he believes will be good for the state.

Carmichael said he is optimistic about the special session and said he does not anticipate a government shutdown happening.

Sen. Mitch Carmichael, left, and Del. Tim Armstead.
(Photo by WV Legislative Photography)

Carmichael said this is a plan that the governor, the Senate and many House Democrats support.

“What is exciting about this is it’s a real tax cut for the people of West Virginia,” Carmichael said. “For those earning a wage, supporting their families, they will see more money in their paychecks as a result of the passage of this tax reform proposal.”

In a news release earlier this week, House Speaker Tim Armstead said the House majority was closed out of the process and said that the governor’s plan does not have support from a majority of members.

“I’m saddened that the governor continues to refuse to acknowledge the reality that his current plan still does not have the support of the majority of the House of Delegates,” Armstead said in the release.

Armstead went on to say that the House has “repeatedly tried to get the governor” to work with them on a framework that would gain support of members but said the governor “has repeatedly shut the door in our face.”

“Until he begins to accept reality, we will get nowhere in this budget debate, resulting in a prolonged special session that could have been avoided had the governor been willing to work with the House,” Armstead said in the statement.

“I believe most West Virginians are wondering why the governor would call a special session without an agreed plan, and after closing the House majority — the members elected by the people — out of the process.”

In the Wednesday press conference, Justice said he thinks the budget will include a 1 percent increase in consumer sales tax along with other measures such as looking into the state’s tax system and will include Justice’s roads plan.

Carmichael said the budget figure will be “almost within a percentage point” of what was spent last year.

“We will not allow the government to grow,” Carmichael said. “That’s the advantage of all of this is A. the government has not grown and B. it will provide a tax cut to the citizens of West Virginia that earn a wage.”

Carmichael explained that income tax under this framework will be reduced about 40 percent for lower income brackets and about 16-17 percent for upper income brackets.

“I can’t overstate the importance of this fundamental shift in the tax system of West Virginia from an income-based system to consumption-based,” Carmichael said. “It is much more conducive to growth and opportunity.”

Carmichael said instead of a commercial activities tax, there will be an 8 percent corporate net income tax. He said he’s working with the governor to reduce that number, however. He said this would only be paid by the biggest corporations, not by small businesses.

“The governor feels there is a need to ensure that what is felt by consumers is also felt by businesses,” Carmichael said. “He wants businesses to pay more. I don’t agree with that. It’s not my path to go but in order to win on many other issues, you have to compromise on some. I am working with the governor to reduce that number.”

Carmichael also talked about tiering severance tax so when coal prices are high, the tax rate is higher and when it’s low, the rate is lower. He said this tiering, which the governor has previously discussed, is also in the framework.

“It gives relief when times are bad to the coal industry to keep people working and get a little more when times are great,” Carmichael said.

Carmichael said overall, this budget framework will be a tax decrease.

“I think House members need to evaluate the benefits of tax cuts for the people of West Virginia,” Carmichael said. “Overall, there are some taxes that are increases but there are some decreases and the ones that are decreasing far outweigh those that are increasing. The net is a tax cut for the citizens of West Virginia.

“To focus on one proposal as some in the House are doing and say, ‘Gosh, you’re raising this? What about that?’ The aggregate is to reduce the tax to those earning an income.”

He said with these decreases outweighing the increases, the key piece, which he is willing to accept, is the governor’s roads initiative. Justice has said this will bring 48,000 jobs to the state.

“The roads initiative will create more jobs and more opportunity that will fill in the revenue gaps, not from increasing taxes but rather people going back to work, having more jobs and the state will benefit from that,” Carmichael said. “We’ve got the lowest workforce participation rate in America. People need jobs.”

Armstead said the Legislature presented the governor with a plan that would have avoided a special session and criticized the governor for what he said was a misrepresentation of that budget. He has previously said he anticipates a budget similar to the one the Legislature passed.

“He vetoed that budget and continues to misrepresent to the people what that budget contained,” Armstead said in the release. “That budget contained no cuts to the classroom school aid formula and the cuts to higher education amounted in most cases to less than 1 to 2 percent of each college’s overall budget. The doomsday picture the governor continues to paint about our responsible spending plan is simply not true.”

Carmichael said he does not anticipate a government shutdown.

“At this point right now, people who are high-minded public servants, people of good will should come together and put the benefit of the state above their political ambitions and do what is right,” Carmichael said. “I believe from the Senate’s perspective that’s what we will do. I hope people throughout government see it the same way. I don’t want to shut the government down. I believe that once the more people learn about this plan and strategy and the conservative principles it embraces, the more support it will gain.”

Armstead said in the release earlier this week that he and members of the House want to work with the governor on a plan “that has an actual chance of averting government shutdown” but said the governor has “refused to even speak” with them.

“So long as he continues to turn a deaf ear to the concerns of the House Republicans and the citizens we represent, Gov. Justice will continue to hold the padlock to shut this government down on July 1,” Armstead said in the release. “I sincerely want to avoid a shutdown and the calamity it will create, and I hope the governor will begin to work with us on a realistic way to avoid that.”

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