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Lawmakers looking for compromise on budget

By LACIE PIERSON

The Herald-Dispatch

CHARLESTON, W.Va. — Members of the West Virginia Legislature may not have approved any tax reform measures or even had a budget bill to consider, but Republican-majority legislative leaders expressed some receptiveness toward working out a deal to balance the state’s budget for 2018.

Senate President Mitch Carmichael, R-Jackson, calls the Senate to order during the first day of a special session May 4.
(West Virginia LRIC photo)

In a news conference Thursday, the first day of a special legislative session, House Speaker Tim Armstead, R-Kanawha, said he thought calling the session was a mistake by Democrat Gov. Jim Justice, especially without a complete agreement among leaders in the legislative and executive branches.

About 10 minutes prior to the conference, the House of Delegates voted 59-36 to kill House Bill 104, which was the bill containing Justice’s proposal for tax reform.

“We want to see a fair tax structure, and we want to work with the Senate and governor to do just that,” Armstead said. “This bill was not just that.”

When asked by media, Armstead said ending the session until an agreement was reached would be “the amiable thing to do,” and he suggested Justice had called the session as a means to compel House majority leaders to adopt a tentative agreement Justice had reached with the Senate.

House Republican-majority leaders have expressed their frustration with their rapport with Justice since the end of the regular legislative session on April 9, and Armstead said Thursday that Justice had not been as receptive to tax reform proposals from the House as he had been to Senate proposals.

“I do not have any hard feelings or bad feelings that would in any way prevent me from sitting in the room and talking to the governor and Senate leadership and our leadership team to find the best solution,” Armstead said surrounded by members of the House Republican Caucus in the House chamber. “I think that’s exactly what we need to do.”

It was unclear Thursday evening as to whether the special session would come to a close Friday for negotiations, as Armstead suggested, or if it would progress into next week, as was suggested by Senate President Mitch Carmichael, R-Jackson, prior to Armstead’s conference.

In a series of tweets following the news conference, Justice called the House vote against HB 104 a block on bipartisan tax cuts for West Virginia families.

“West Virginians need to ask GOP leaders in the House why they voted against income tax reform and tax break for veterans,” Justice tweeted. “Stunt by Speaker Armstead today proves he has NO plan to create jobs, NO plan to cut taxes and NO plan to fix budget crisis.”

The news conference brought an end to a day filled with equal parts progress toward advancing bills proposed by Justice and confusion about what kind of support they would have from legislators or whether legislators even intended to see the legislation through during the current special session.

The Senate and the House both took up Justice-proposed bills to give classroom teachers a pay raise, increasing the gas tax and Department of Motor Vehicles fees, and a bill to establish a flat $8 rate for EZ Pass for West Virginia’s road tolls and a $2 increase for all of the tolls for travelers without EZ Pass.

The Senate advanced the bills to first reading, putting them on a path that could lead to a Senate vote Friday. The House referred the bills to committee, which doesn’t entirely kill them but would slow their progress.

In talking with media Thursday morning, Carmichael said the tentative compromise between Senate leaders and Justice was a good deal that reflected about 80 percent of the original structure of the Senate’s tax and budget plans.

When asked about the House’s chilly response to the proposal, Carmichael said he was anxious to hear what House members wanted to do.

“This is our plan that the governor will sign,” Carmichael said. “It keeps government open, cuts taxes for West Virginians and holds the line on spending. If someone has a better plan, I’m all ears, but I don’t see how you get any better than this.”

Justice and Republican-majority leaders started in February about $450 million apart on the budget.

Justice’s budget called for $4.5 billion in spending, including support for a new Save Our State fund and pay raises for teachers that would have increased the amount of revenue needed for the state to function.

Justice also called for the increases to the DMV fees, gas tax and toll rates to support his highway repairs and jobs plan.

Majority leaders in the Legislature had called for a $4 billion budget with almost no new spending and relying on cuts to state funding to deal with any estimated revenue shortfalls existing therein.

On Thursday, Carmichael described the deal as one where Justice had lowered some of his revenue-increasing tax measures, while the Senate had increased its support for the Save Our State fund, teacher pay raises, and increasing fees to support Justice’s highway repairs and job plan.

In total, Carmichael said a budget based on the agreement would total about $4.15 billion.

The bill killed in the House, which had tentative support in the Senate, included multiple tax changes:

  • A temporary increase in the tax rate on people making more than $300,000 a year.
  • A new tier system for coal and natural gas severance taxes.
  • An increase in the tax credits available to businesses that rehabilitate historical structures.
  • Reclassifying and phasing out the state’s income tax.
  • Income tax exemptions for military veterans.
  • A 1 percent increase to the state’s sales tax.
  • n An increase of the corporate net income tax.

Lawmakers approved a budget on April 8, but Justice vetoed it on April 13. That $4.1 billion budget included no tax increases, instead relying on budget cuts and taking $90 million from the state’s Rainy Day Fund.

The bill was passed following a session that included name calling and contentious public statements from Justice and leaders of both parties in the legislative branch.

Fiscal year 2018 begins July 1, 2017. If the Legislature doesn’t pass a budget by June 30, state government will shut down.

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