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Legislators to address budget in special session

By Andrea Lannom

The Register-Herald of Beckley

CHARLESTON, W.Va — Heading into a special session to build a budget for next year, leadership in both chambers of the West Virginia Legislature and Gov. Jim Justice’s office will be looking for common ground to start negotiations.

Even that seems challenging at this juncture with House Speaker Tim Armstead holding fast to his opposition to tax hikes and the governor being adamant that the state needs additional revenues to avoid job losses and to fund needed initiatives.

A date for that special session has not been set. A budget needs to be approved and in place before June 30 to avoid a government shutdown.

Disagreements of what that budget should entail are a known quantity. In a press conference Thursday, Justice said the Legislature’s budget cuts were too severe, and called it “a bunch of bull-you-know-what.” For effect, the governor brought along a pile of cow manure.

House and Senate leadership have said the governor’s budget includes taxes that legislators won’t support.

However, House Speaker Tim Armstead, Senate President Mitch Carmichael and the governor’s chief of staff have all expressed some level of optimism that the three will be able to come to an agreement.

Two plans emerged the last night of the regular session. There was the budget bill, which reflected negotiations between the House and the Senate. Then, there was a proposed framework that the governor and Senate leadership had drawn up – independent of House influence.

Under House Bill 2018, the budget was set at $4.102 billion in general revenue spending. It cut $60 million from the current budget and was $85 million shy of the 2016 fiscal year budget.

This was the budget that Justice vetoed. It represented a $400 million difference with the governor’s first plan and $200 million from his second proposal, known around the capitol as Budget 2.0. Both of the governor’s budgets included proposals for the Save Our State fund to market the state and invest in tourism along with a 2 percent teacher pay raise.

The budget bill cut Medicaid by $48.6 million, which – including the corresponding loss in federal matching dollars – would have been in the neighborhood of a $200 million loss for the program in West Virginia. The bill did not cut the Medicaid waiver programs, health departments or free clinics.

The bill shaved $29.8 million from higher education, which translates to about a 2 percent reduction to universities’ overall budgets.

West Virginia Public Broadcasting would have seen a loss of about $1 million in state funding, and fairs and festivals were scheduled for an across-the-board 20 percent cut.

The governor’s 2 percent teacher pay raise was nixed, as was his Save Our State initiative to market the state.

The budget bill also called for $90 million to be withdrawn from the Rainy Day Fund, which drew the governor’s ire. He has said all along that continuing to draw down the fund would have a negative effect on the state’s bond rating and, as a result, the state would have to pay more in interest for bonded programs, like the jobs program he hopes citizens pass in an upcoming but as yet unscheduled ballot referendum.

The governor’s budget proposals have evolved over time, starting with plans spelled out on a white board at his State of the State address and then Budget 2.0 that he announced later in the legislative session.

It eventually took the form of what he presented in a Saturday night press conference when he said he had reached a potential deal with Senate President Mitch Carmichael. It called for $50 million in cuts but included revenue measures, including an increase in the consumer sales tax, a “rich man’s tax,” a 0.00045 percent Commercial Activities Tax and a 4.5 cent gas tax. It also restored the 2 percent teacher pay raise and money for the Save Our State Fund.

The agreement kept its hands off higher education, the Department of Health and Human Resources and K-12, Justice had said Saturday.

The proposal called for ratcheting down personal income tax rates, beginning Jan. 1, 2018 – which both the House and Senate had proposed in different forms during the session.

In previous interviews with The Register-Herald, Carmichael said the framework could be used as a potential starting point for future negotiations. He is hoping a budget compromise will include tax reform.

However, Armstead said Thursday he anticipates the budget ultimately passed in the special session won’t be too different from what the Legislature already passed – and Justice vetoed. He said the governor’s proposal would “find little support within the House.”

Armstead also said he would not want to proceed with the governor’s proposed taxes.

“These were components discussed throughout the 60-day session and it’s disappointing for him to return to a proposal that many members had already expressed their lack of support for and opposition to,” Armstead said Thursday.

Carmichael said Thursday he hopes a compromise includes some tax measures that went through the House and Senate. The governor also has expressed support for some of the tax measures, such as lowering of the personal income tax, which he included in his announced framework.

Armstead, however, said lowering the sales tax rate and broadening the base of commercial activities could be up for discussion but mentioned concerns with lowering the income tax.

“There’s a great deal of room for discussion of where we go,” Armstead previously said. “Our plan is to lower the sales tax, but there is a great deal of concern from many members of the House in increasing the sales tax to 7 percent to lower the income tax. There is concern as well with border counties and what that will do with the economy in those areas. There is significant concern with that component.”

Neither the House nor the Senate’s tax measures passed through the Legislature.

All three expressed some level of optimism of coming to some sort of agreement.

“I remain the eternal optimist and say we can have a win-win scenario,” Carmichael said Thursday.

Armstead also said he’s willing to talk to the governor and work with him to find a “responsible budget.”

Justice’s chief of staff Nick Casey also expressed optimism that the House, Senate and governor could come to a solution.

“The momentum is there now to get it done in a way where we all win. Everyone will hurt a bit but all together, we will win,” Casey said Thursday.

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