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Justice presents new budget plan, includes cigarette, sugary drinks taxes

By ANDREA LANNOM

The Register-Herald

CHARLESTON, W.Va.  — Creating a sugary drinks tax and increasing the cigarette tax are two proposals Gov. Jim Justice suggested Monday as part of his alternative path to resolve the budget.

Justice joined Department of Revenue Secretary Dave Hardy in a press conference to give an update on the budget. Justice proposed what he called a Better Health Initiative by creating a 1 cent per ounce tax on sugary drinks, which he estimates will generate $85 million. Hardy said the sugary drinks tax is different than the pop tax which goes to the medical school.

He also proposed a 50 cent per pack tax on cigarettes, which he estimates will raise $47.8 million.

“The most important thing we can do is come up with a budget and come up with a pathway of growth,” Justice said.

Justice divided his proposal into the left and the right sides.

On the left side, Justice said he wouldn’t be opposed to the Legislature proposing $50 million in, as long as they do not cripple the state. He said this side will generate a $63 million surplus.

“Here’s the component it has to have for me,” Justice said. “We have to balance the budget but not cripple us.”

Besides the Better Health initiatives, the left side consists of these proposals:

• Making wealthier West Virginians pay more. Under Justice’s example, people making more than $200,000 would pay $500, people making more than $250,000 would pay $750, and people making more than $300,000 would pay $1,000. Justice estimates this will generate about $8 million, which will go into the SOS Fund.

• Smoothing the annual required contribution for teachers’ retirement. Mike McKown, director of the State Budget Office, explained that what this means is if there is one year that requires a $70 million contribution and another three years with zero, this would spread out that $70 million over those three years.

• Business for Better WV proposal, by cutting his business tax proposal from 0.2 percent on gross revenues to $0.00075, which he estimates will generate $80.4 million.

• Cutting the consumer sales tax increase from 6.5 percent as he proposed originally to 6.25 percent, which he estimates to generate $46.5 million.

• Taxing professional services. These are relatively the same as Justice’s first proposal but his new plan calls to leave an exemption for advertising services.

On the right side is the roads plan, which Justice said will generate 48,000 jobs and $250 million in payroll taxes.

This side includes these proposals:

• Offering an $8 a year EZ-Pass for all West Virginians but this is not mandatory. The EZ-Pass would be available for out of state residents as well.

• Turnpike fees will increase from $2 to $4 with the difference going toward bonding.

•Having vehicle inspections every three years. The new plan keeps the increase in DMV fees from $30 to $50.

• Lowering the proposed gas tax increase from 10 cents to 4.5 cents.

• Doubling the maintenance fund from $150 million to $300 million for repairing roads, potholes and bridges.

“It’s a different pathway isn’t it,” he said as he wrote his plan on one of the white boards. “I’ve been working like blooming crazy to come up with a pathway that will get us there.”

Justice said he will send his modified plan up to the Legislature immediately, saying “at some point in time, the other side has got to get to work on the budget.”

“I’ve heard criticism to my plan but I have not heard alternatives to what we can do,” Justice said. “We are approaching the halfway mark and it is pitiful to get to the point in time where we have to maybe have a special session.”

When asked about eliminating the state income tax, Justice said he wouldn’t like to see that happen just yet. Republican senators have already began efforts to eliminate the state’s personal income tax and replace with a consumption tax. The bill, Senate Bill 335 is currently in committee.

“Down the road, I would like to see us eradicate the state income tax but just think about this,” Justice said. “We are in such a mess. To jump into that is so phenomenally risky today that it’s just not even possible. … Today, it’s too big of a lean on everyday people. It’s too big of a leap out of an unstable situation. If we were stable, I would be 100 percent behind it.”

Justice said he’s open to listen to any cuts the Legislature comes up with but said he doesn’t want to “put a dagger in the heart of West Virginia.”

“If we constrict more, more people are going to leave and when more people leave, revenue goes down and we’re faced with the problem again.”

Following Justice’s press conference, Senate President Mitch Carmichael, R-Jackson and House Speaker Tim Armstead, R-Kanawha, issued a joint statement.

In the statement, Armstead and Carmichael said they were glad the governor is open to alternatives and said some of the initiatives such as smoothing the Teachers’ Retirement System are suggestions they brought during meetings with the administration.

“ We also agree that additional cuts of $50 million or more are needed, and we are carefully evaluating various options for significant cuts. We hope the governor will continue to work with us on these and other ideas to close our budget gap,” the statement said. “Like the governor, we agree we need to think big to solve our budget crisis. The Legislature has started to work on major tax reform proposals that will spur economic growth. Members of our finance committees are working diligently to review the governor’s proposed budget to identify savings in each agency. We believe that their work with the governor’s cabinet secretaries will yield additional ways to increase efficiencies and save taxpayers money.”

The statement said legislators are working to solve the crisis and hope to have a budget passed before the last day of session.

“We are working night and day to solve this budget crisis, and are putting forward our own alternatives,” the statement said. “We are committed to doing everything we can to have a budget passed by this Legislature before we end our regular session on April 8.”

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