By ANDREA LANNOM
Times West Virginian
CHARLESTON, W.Va. — Saying West Virginia is dying and suffering a depression, Gov. Jim Justice delivered his State of the State Address and presented his budget, urging a call to action to resolve the deficit.
Justice broke tradition Wednesday night by not having a prepared speech, mentioning that people wouldn’t see teleprompters anywhere on the House floor. He also used a white board to illustrate some of his points.
Calling his budget the Save Our State or SOS budget, Justice proposed to once again look to the Rainy Day Fund to resolve the $123 million hole in the current fiscal year. For the $500 million deficit the following year, he proposed a four-point approach, including $26.6 million in cuts and $450.15 million in “revenue enhancements,” or taxes.
“Let me tell you, there is no question we’ve been 50th forevermore,” Justice said. “We are better than that. Now, like it or not like it, we are dying 50th. This is the most difficult and biggest depression that you could ever possibly imagine. It’s the biggest of the biggest.”
(Photo by Chris Jackson)
“We are in such a hole that we’ve got to quit digging,” Justice later added. ‘We’ve got to quit working against one another and somehow hold hands and run across the finish line together.”
Staff members explained the four parts of the budget — cuts to the general revenue fund, “revenue enhancements” or taxes, rejuvenating roads, and a one-time, last-time bailout to fix the current fiscal year.
The budget calls for $26.6 million in cuts from the general revenue fund. Under this proposal, these cuts are:
• $3.7 million cut to Regional Education Service Agencies
• $5.9 million cut to West Virginia University
• $2.8 million cut to Marshall University
• $1.7 million cut to the West Virginia Network
• $155,000 cut to the College Readiness Program
• $2.7 million cut to the Division of Labor
• $369,000 cut to vehicle purchase reduction
• $4.6 million cut to the Educational Broadcasting Authority
• $4.3 million cut to the Division of Culture and History
• $341,000 cut to the West Virginia Film Office.
All cuts represent a 100 percent cut from the general revenue fund except those to WVU and Marshall, which represent a 4.4 percent cut. However, just because an agency would be cut by 100 percent from the general revenue fund doesn’t mean that it wouldn’t still get funding from other sources.
Justice proposed $450.15 million in “revenue enhancements” from eight sources:
• Raising the sales tax to 0.5 percent to 6.5 percent, generating $92.7 million
• Eliminating tax exemptions for professional services and advertising, generating $87.6 million
• Creating a 0.2 percent Commercial Activities tax on gross revenues, generating $214.3 million
• Raising the beer barrel tax from $5.50 to $8, generating $2.8 million,
• Raising the wholesale liquor markup from 28 percent to 32 percent, generating $2.8 million
• Ending the General Revenue subsidy to the State Road Fund, generating $11.7 million
• Repealing the Film Tax credit, which will have a minimal effect in 2018 and will generate $3 million in the future.
• A one-time Worker’s Comp Debt Fund Revenue Redirect, generating $38 million.
“I hate tax increases,” Justice said. “I hate them. I really do, but I want to show you the most painless way I can think of that we can get out of this mess.”
“I’m telling you, if you don’t do this, you’re dead,” Justice later said. “You’re dead. You’re dead beyond belief.”
Money generated from the beer tax and the wholesale liquor markup will be dedicated to tourism.
The workers’ comp fund money will be diverted to the General Revenue fund. This does not include the retirement plan, which is untouched in this budget.
The cuts to RESAs do not eliminate the agencies but get rid of the general revenue funding for them. Raises for teachers amount to $808, which averages to 2 percent for new and experienced teachers.
Justice also calls for giving a 2 percent pay raise to classroom teachers and getting rid of the 2 percent raise for state employees.
“We’ve proven how to be dead last. … We’ve got a bunch of sad, unhappy campers. We need gigantic education reform,” Justice said.
Justice said he plans to submit a bill immediately to eliminate any “unnecessary bureaucracies” and return education control as much as possible to the local level. He also called for “throwing Smarter Balanced testing in the trashcan” and replacing it with ACT. He also wants to toss the A-F grading scale.
“That’s got to go. … Everyone wants to go where education is best. Businesses want to go where kids are educated the best,” Justice said.
As part of his budget plan, Justice called for establishing a Save Our State Fund, setting aside $105 million for economic development and infrastructure investment, which is independent of the highways project.
For the Highway Revenue enhancements, he wants to dedicate new revenue to a billion dollar-plus roads program. This project calls for raising the annual decal fee from $30 to $50 which will be dedicated to the highway improvement program.
There also would be a $1 increase for tolls, dedicated to the highway improvement program. Justice predicted other toll roads in the state as well during Wednesday night’s speech.
The gas tax would also increase by 10 cents.The current rate is 20.5 cents.
For the roads program, Justice anticipates creating 25,000 jobs. Some of these would be immediate and some would result from a “trickle-down” effect.
“This would make tourism explode in this state,” Justice said. “Honest to Pete. This is the 800-pound gorilla in the room.”
The total investment for the roads program is $1.4 billion. Legislative approval is necessary of a fee change for the DMV fees and people will need to vote to approve the general obligation bonds, which would generate $400 million over 20 years.
Legislators also would need to approve broadening the usage of the tolls past the use of the turnpike.
The transportation investment program comes in two phases. The first includes projects in the one- to three-year range.
Phase one projects include constructing 3.8 miles of four-lane road of the King Coal Highway Airport Road to John Nash Boulevard in Mercer County. This project is estimated to cost $50 million.
It also includes paving the Coalfields Expressway grade and drain project in Wyoming County, which is anticipated to cost $54.5 million.
Second phase projects, which are in the three- to five-year range, include constructing 3.3 miles of two-lane road and a new bridge across the New River at the New River Parkway I-64 near Sandstone to Fall Branch in Raleigh and Summers counties. This will cost about $75 million.
It also includes a project in Wyoming County that would construct a four-lane highway of the Coalfields Expressway W.Va. 16 to Welch costing about $110 million.
Justice called for stricter penalties for drug dealers and said he wants to build drug treatment facilities in Beckley, Charleston and the Eastern Panhandle.
“If we don’t fix the drug problem in this state, it will cannibalize you,” he said. “We have to have laws. There is no question whatsoever that if a drug pusher rolls in from Detroit selling drugs, he ought to know this is not going to be fun if we catch him.”
Justice said he also would like to see furniture manufacturing brought back to West Virginia, saying he would like to submit a bill to U.S. Senators Shelley Moore Capito and Joe Manchin to that effect.
He called for action, telling people to call legislators to tell them how they feel about the budget and what should be done.
“I have aggressive ideas. I have bold ideas,” he said. “We’re dying. We are dying. It is so blooming bad, you can’t possibly imagine. There is a way out. There is real prosperity in front of us. There is a way out.”
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