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Justice: Budget talks with WV House stall


Charleston Gazette-Mail

CHARLESTON, W.Va. — Gov. Jim Justice said he “got right to the altar” in budget negotiations with West Virginia House leadership Wednesday evening but couldn’t tie the knot on the last $45 million in tax increases he says are needed to balance the 2017-18 state budget bill.

West Virginia Gov. Jim Justice, left, provides an update on budget negotiations with the Legislature on Thursday at the Capitol.
(Photo by Kenny Kemp)

“We couldn’t get the vote. We couldn’t get a decision,” Justice said Thursday during a news briefing. “The Republicans couldn’t decide what to do, and then they left, and that was last night.”

Justice, who originally had proposed nearly $400 million in tax increases to close a nearly $500 million revenue shortfall in the 2017-18 state spending plan, said negotiations were down to getting House leadership to sign off on one of two tax measures: A ¼-percent increase in the consumer sales tax, or a combination of a 15-cent-per-pack increase in the cigarette tax and a 2-cent per-can-tax on sugary soft drinks.

Both increases are scaled back from Justice’s original proposals.

In his initial budget plan, Justice had proposed a ½-percent increase in the sales tax, from 6 percent to 6.5 percent, and in what has come to be known as his Budget 2.0 plan, Justice proposed tax alternatives including a 50-cent-per-pack tobacco tax hike and a 1-cent-per-ounce tax on sugary soft drinks.

House Finance Chairman Eric Nelson, R-Kanawha, said later Thursday that House leadership is continuing to look, instead, at broadening and lowering consumer sales taxes, by eliminating exemptions on a number of professional and personal services that currently are exempt from sales tax collections.

On Wednesday, the House opted not to take up a bill that would make those changes (HB 2933), leaving open the option to amend it into a similar Senate bill that passed the Senate on Wednesday by a 24-12 vote (SB 409) and now is headed to the House.

On Thursday, though, Justice reiterated his objections to both bills, which would lower the income tax rate, making up the revenue with consumption taxes covering several goods and services.

Justice said he supports lowering or eliminating income taxes, in theory, but that the state first needs to revitalize its economy before such cuts would be feasible.

He said of the proposals to shift tax burden from income taxes to sales taxes, “Who’s going to carry the burden? The people — the everyday Joes, and who’s going to get off scot-free? Jim Justice — the rich guy.”

However, Nelson said of Justice’s proposal to raise taxes, “Is that not shifting to the consumer?”

Justice said the administration has agreed to about $55 million in spending cuts — primarily including recommendations outlined in the House Finance budget proposal released Saturday.

“We gave in to things they wanted, as far as cuts,” Justice said.

That includes about $20 million in continuing 2-percent mid-year budget cuts ordered by Justice’s predecessor, Earl Ray Tomblin, and about $22 million of the $26.6 million in spending cuts originally proposed by Justice, excluding an initial proposal to eliminate $4.6 million in funding for West Virginia Public Broadcasting and “Mountain Stage.”

However, Justice said he will veto a budget bill if it cuts programs and services that are, in his words, imperative to the state.

The governor said he is convinced most West Virginians are willing to pay a little more in taxes, rather than have senior centers, state parks and state colleges close and have Promise scholarships slashed.

“You find me one good West Virginian who would say, ‘Well, I would rather do that than pay a penny on $4,’ ” Justice said.

Despite talk of “right-sizing” state government, the House has defeated a bill to eliminate the state Film Office tax credit, intended to save $5 million a year, and is continuing to debate legislation to eliminate a subsidy for greyhound racing, to save up to $15 million a year.

“Right-sizing government is going to affect everyone,” Nelson said. “It’s going to have a little negative effect on everything.”

While negotiations have been ongoing with House leadership, Senate leadership has been more obstinate, staging a symbolic floor vote Tuesday against a number of Justice tax increase proposals.

“There’s no need for the other side standing and beating its chest now, when cooler heads need to think, be smart, have wisdom, work together and finish this up,” Justice said of that display.

The governor said he believes that, if the administration and House leadership reach a budget agreement, the Senate will be compelled to support it.

Nelson said lines of communication between the House and Justice administration remain open.

“I can say, in my short three years as Finance chairman, without a doubt, we’ve had more direct conversations, not necessarily with the governor directly, but with many on his staff,” Nelson said.

Justice, meanwhile, got through the 27-minute briefing without using the colorful metaphors that have tended to irritate legislators this session — with one exception:

“You would have to be a dumb bunny if you don’t think all of this will go together and help the state,” Justice said, referring to his budget plan and to multiple bills pending to greatly increase funding for roads and infrastructure projects.

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