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Justice issues latest WV budget plan; talks to resume today

By PHIL KABLER

Charleston Gazette-Mail

CHARLESTON, W.Va. — Legislative leaders are expected to return to the West Virginia Capitol Thursday morning to resume negotiations on Gov. Jim Justice’s latest revenue proposal, a plan with a less-steep increase in the state sales tax and with a slower, three-year phase-in of a reduction in income tax rates favored by Senate Republicans.

Gov. Jim Justice, seen here during his State of the State address on Feb. 8, will resume budget talks with legislators today.
(Gazette file photo)

“Progress is being made,” Justice said in a statement Wednesday. “I’ve explored every way possible to incorporate ideas from all sides, and we are now on the doorstep of a great compromise that will help all of our people.”

Justice’s plan would raise the state sales tax from 6 percent to 6.35 percent — lower than the 7.25 percent proposal advanced by the Senate on May 24 that the House of Delegates refused on an 85-0 vote.

However, the governor’s plan broadens repeals of current sales tax exemptions, including exemptions for purchases by building contractors, which Senate President Mitch Carmichael, R-Jackson, noted has been a point of contention in the Senate.

The governor’s proposal also further slows down the income tax rate reductions sought by Senate Republicans, with annual reductions of 7 percent, 7 percent and 6 percent, with yet-undisclosed triggers for economic growth required for the second and third years to go into effect.

As it left the Senate, the that chamber’s version of the revenue plan would provide enough funding to balance the 2017-18 budget, but only because the sales tax hike would take effect on July 1 — six months before the income tax reductions would begin to go into effect.

According to Department of Revenue projections, the Senate’s plan — which would have cut income taxes 20 percent in two years — would have resulted in $178 million shortfalls in future budgets.

“We’re willing to compromise to get something done,” Carmichael said Wednesday of the governor’s latest proposal.

However, he said, it is incumbent on the House of Delegates to take up the new revenue measure first, since the House has rejected Senate proposals on three occasions in the first 10 days of the special session on the budget.

House spokesman Jared Hunt said Wednesday that Speaker Tim Armstead, R-Kanawha, is not commenting on the latest Justice proposal, pending an opportunity to go over the details of the plan with the House Republican caucus and get feedback from its members.

The caucus was scheduled to meet via conference call Wednesday evening.

“West Virginians are counting on us to deliver results,” Justice said. “Now is not the time to let political games get in the way. I want the budget finished quickly, so the taxpayers aren’t forced to keep shelling out $35,000 a day on the special session.”

He added, “We have the deal of all deals on the table right now. It’s time to move quickly.”

Justice hosted a series of what he called mediation meetings at the Capitol last Thursday and Friday, meeting separately with House Republican, House Democrat, Senate Republican and Senate Democrat leaders.

The special session to resolve the revenue shortfall and pass a 2017-18 state budget has been adjourned since May 24, and is scheduled to resume on June 5. That leaves just 25 days until the new budget year begins on July 1 — the date when non-essential government services would shut down if a 2017-18 budget has not been enacted.

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