By DAVID BEARD
The Dominion Post
CHARLESTON, W.Va. — The governor’s budget countdown clock is ticking away in front of his office in the Capitol — his way of needling the Legislature to come up with its own financial plan to meet his.
As of Friday, the clock showed 36 days until the end of the session; it doesn’t include the constitutionally mandated Budget Week that follows.
The GOP-led Legislature responded far less than warmly to Gov. Jim Justice’s original plan that included $26.6 million in cuts and $450.15 million in tax hikes and some spending halts to fill a projected $500 million shortfall.
So on Feb. 27, Justice put forth a revised plan (summarized in accompanying box), which has so far generated little more warmth.
The Dominion Post spoke this past week to five local GOP legislators — two senators and three delegates — to get their take on Justice’s new ideas and what they see coming from their leadership for a budget bill.
Sen. Randy Smith, R-Tucker:
“We’re just so top heavy in the government,” he said. There has to be some of what others have called “right-sizing,” trimming or consolidating various boards and such.
“Unless they’re willing to curb some of that, I’m not for any increase.”
But he’s not saying he won’t go for any tax hike. “I’ve learned you never say never.”
He’s disappointed candidate Justice talked about right sizing government and no new taxes. “It’s like it’s a totally different person that got elected governor from the person that was running for governor.”
The Senate is working on a plant to replace the personal income tax with a broad consumption tax. Smith noted that West Virginia has the nation’s lowest workforce participation, so a relatively small number of people are shouldering the primary revenue source for the General Fund.
“It’s just not a fair tax.” A consumption tax broadens the base.
He sees two sides to Justice’s road tax plan. “We need to do something for infrastructure.”
Justice reduced his gas tax hike from 10 cents to 4.5 cents, but it may still be a problem. “My district’s a rural district. People travel a long way to get to work.”
They are using the roads more and so should pay more, but the tax hike will also affect them more. Some travel long miles for low-paying jobs. “Those are the people it’s really going to hurt.”
Thinking of Justice’s overall package, Smith said, “I’m not saying I’m against a logical raise.” But $450 million would be the biggest hike in history and there’s no way he would vote for that.
Smith shares a criticism voiced by others in the GOP: Project Fiscal Year 2018 is lower than the two previous years, but Justice plans to spend close to $300 million more than in FY 2017 and fund it with tax hikes. “If anything, you should at least hold the line. When you’re in a financial crisis, you don’t raise your budget.”
While Justice is taunting the GOP to reveal a plan, Democrat legislators have also been asking where the plan is. Smith echoed what the Finance chairs have explained. “Everybody thinks the budget should be the first bill you pass. You can’t.”
The system isn’t set up that way. The Finance committees spend their first 30 days in agency budget hearings. Meanwhile, bills that affect the budget are working through the system. That’s why Budget Week comes after the session. “You can’t do a budget unless you know how much you’ve got coming in and how much you’ve got going out.”
Sen. Charles Clements, R-Wetzel:
“I do not like the so-called gross business taxes,” he said. “You can have high sales and low profits, and most of your profits get eaten up with that flat tax.”
He’s reminded of something radio journalist Paul Harvey used to say: “Businesses don’t pay taxes, consumers do.”
He has no problem with the sugary-drink tax. It’s relatively small, drink prices rise and fall, and people will drink it anyway. “If we want it, we’re going to pay for it.” It’s the same with the beer barrel tax. That one won’t stop anyone from buying beer.
Cigarettes are already highly taxed but not as high as places like New York, so it won’ curb many smokers.
Looking at Justice’s roads package, Clements foresees a federal increase in infrastructure spending.
But for West Virginians, “If we want the roads we’re going to have to pay for them. There’s absolutely no way the fairy godmother’s going to come down and twinkle roads and we’re going to have good roads.”
People get emotional over highway taxes, he said, but they’re a small price compared to the big picture. We pay $250 to $300 a year to use all the highways in the country. “That’s a bargain.” But we pay $800 to $1,500 for insurance.”
And how much does it cost to tear up our cars on bad roads?
DMV fees have been stagnant for years, so the increases are about due. And while Justice has proposed a 4.5 cent tax hike, the state has lost about that much through decline in the variable wholesale portion of the tax, so it’s about a break-even.
“I feel that for so many years we kicked the can down the road and now we’ve come to a total dead end,” he said, “I think that the budget will get worked out. It just has to be done in an orderly fashion. … I think we all need to get together in a sensible way.”
Like Smith, Clements warns against impatience with formulating a budget bill. “Technically, that’s the last bill that should come out of the Legislature.”
Delegate Cindy Frich, R-Monongalia:
“I’m very concerned about the sugary-drink tax,” she said. The current 1-cent “pop tax” funds the state medical schools. While Justice has said his tax is a separate issue, “If you open up that part of the code, it would be possible for WVU to lose some or part of that money.” Educating medical providers is a necessity.
Her comment on Justice’s tax on the wealthy is one sentence: “I thought he wanted to get rid of the income tax.”
Frich isn’t comfortable that about a quarter of Justice’s proposed cuts come from her district: $5.9 million for WVU, $1.7 million for WVNET.
Justice’s teacher retirement fund smoothing plan actually came from Delegate Ron Walters, R-Kanawha, she said. “It’s not his plan, it’s the House plan. We were going to smooth before he mentioned it.”
And Justice’s plan to tax the sale of professional services didn’t fly very far in House Finance last year, she said.
His beer tax may hurt Monongalia County by sending people across the border to Pennsylvania, but in general sin taxes are easier to live with. “The tobacco tax has always been easier for me to support.”
Justice has said his roads plan will generate 48,000 jobs. “It’s not a jobs plan.” Out-of-state contractors and workers will come in. “We certainly need to improve our roads,” and the reduced gas tax hike should be more palatable for residents.”
Delegate Amy Summers, R-Taylor:
“I get that he’s trying to try different ideas to see what might be palatable to us,” she said. “I am definitely not in favor of Save Our State (see above story) right now when we’re $500 million in the hole. It’s a great idea but I don’t think we can afford it.”
About his tax on the wealthy: “I don’t really want to raise taxes on anybody. Every dollar we raise is a dollar out of somebody’s pocket. People are already paying a lot.
“We’re working hard on the budget, where we are going to probably look at those exemptions and pare those down without raising taxes and do more budget cuts, because we think there are still more cuts that can be made.”
The House is also looking at more one-time account sweeps. It’s one-time money, she acknowledges, but “it’s not prudent to let them sit there, either.”
Justice’s proposed road bonds appear to be good things, she said, “We do need money for roads.” But some of her constituents are worried about building new roads when the state’s not maintaining the ones we have. She hopes the new Department of Transportation secretary does a better job managing what we’ve got.
Delegate Joe Statler, R-Monongalia:
Roads are a core part of Statler’s work at the Capitol. Regarding Justice’s proposals, he said, “I’m still open to looking at all possibilities out there, and I think that’s what we have to do. … I like what he’s talking about on the roads. I know we’ll argue about the fees, the gas tax hike.”
But he appreciates that Justice wants to put a bond before the residents, for them to decide.
“Any time you talk about roads and how to improve them, I’m going to listen up,” he said.
Statler also appreciates that Justice rethought his original ideas and came to the table with a new set. “I don’t know where we’re going to be on that. … It’s hard times out there for everyone. … People are a little reluctant to raise the taxes. But at the same time, I’ve still got an open mind. I plan on doing whatever we need to do, what’s best for the state of West Virginia.”
He doesn’t favor rais-ing sin taxes because they’re narrowly focus-ed. “We’re all in this trouble together.”
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