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Legislature unveils budget plan for ‘living within our means’

By EVAN BEVINS

The Parkersburg News and Sentinel

CHARLESTON, W.Va.  — Republican legislative leaders on Monday unveiled a budget framework that limits state spending to the projected $4.055 billion in general revenue for the upcoming fiscal year.

Describing the plan in a press conference that filled the Senate Reception Room with lawmakers and members of the media Monday afternoon, Senate President Mitch Carmichael, R-Jackson, described it as both historic and common-sense.

West Virginia Speaker of the House Tim Armstead, right, answers questions about the Legislature’s budget proposal as Senate Majority Leader Ryan Ferns, R-Ohio, left, and Assistant House Majority Leader John O’Neal, R-Raleigh, listen Monday in the Senate Reception Room at the Capitol complex.
(Photo by Evan Bevins)

“We’re living within our means, and it’s news,” he said.

In a statement released Monday afternoon, Gov. Jim Justice, who in February proposed a $4.5 billion budget that included $450 million in tax and fee increases and $26.6 million in cuts, said the legislative plan wouldn’t provide the help West Virginia needs.

“Bless their hearts, but the Legislature’s framework will not save the patient,” Justice said in the release. “I’ve heard a lot about the need for more cuts, but I haven’t heard any specifics from the Legislature.”

A check representing the $4.055 billion projected for the 2017-18 general revenue fund — and the amount Republican legislative leaders propose budgeting — is shown Monday in the Senate Reception Room, flanked by legislators during a press conference announcing the legislative leadership’s budget framework. (Photo by Evan Bevins)

A release from Carmichael and Speaker of the House Tim Armstead, R-Kanawha, outlined $300 million in changes from Justice’s original budget proposal, including eliminating greyhound subsidies and the casino modernization subsidy and not passing a proposed 2 percent raise for teachers. It said $150 million more will be eliminated by “prioritizing spending in other areas of the budget.”

How that is accomplished will largely be up to the departments and agencies funded by the General Revenue Fund.

“What has been off the table for so long around here is the programs that have been sacrosanct,” Carmichael said.

Those include the Department of Health and Human Resources, higher education and K-12 education, he said.

Armstead said legislators believe $10 million to $15 million could be reduced from K-12 education at the state level — through the Office of Performance Audits and regional education service agencies, for example. Depending on how much needs to be reduced, the Legislature could then go into the school aid formula but with the goal of avoiding an impact on teacher salaries, he said.

West Virginia Speaker of the House Tim Armstead, right, answers questions about the Legislature’s budget proposal as Senate Majority Leader Ryan Ferns, R-Ohio, left, and Assistant House Majority Leader John O’Neal, R-Raleigh, listen Monday in the Senate Reception Room at the Capitol complex. (Photo by Evan Bevins)

What the Legislature aims to do is give agencies the ability to allocate money where it is needed most, Armstead said. He compared it to a family adjusting their budget after an unexpected expense.

“They have to move money from one area to another. That’s how we’re trying to give increased flexibility to these agencies,” Armstead said. “I wouldn’t call it reductions. I think it’s setting priorities in the current year’s budget.”

The Higher Education Reform Bill, which has passed the House of Delegates and is working its way through the Senate, lifts many restrictions on how funds can be spent in that arena, Carmichael said.

“We are doing it in the most responsible manner possible,” he said. “We’re not telling an agency they have to get rid of someone. We’re saying this is the amount of money you have to live within.”

Asked if they would support any tax increases, Carmichael said only “in the context of tax reform.

“We have very little, if any, (interest) in supporting a tax increase to backfill” government coffers, he said.

The framework does, however, include accepting Justice’s proposal to increase the beer barrel tax from $5.50 to $8, which would yield $2.8 million.

“That was part of the provisions that the governor had proposed that we do think there would be support for,” Armstead said, noting it was discussed during last year’s special budget session.

Senate Bill 335 was introduced Monday, intended to provide what Carmichael described as a “revenue-neutral” mechanism for tax reform that could be phased in over time. Proposals include reducing personal income tax to 2.5 percent and eventually repealing it, establishing additional tax credits and replacing the consumer sales and services and use taxes with a revised 8 percent tax on sales, leases and use of goods and services. There are a number of exemptions, but food is not among them.

Legislative leaders used two symbolic checks to represent their plan and Justice’s. Theirs was a check for $4.055 billion to the state’s agencies, while the governor’s was for $4.5 billion and stamped with the words “Returned, Non-Sufficient Funds.”

Carmichael said legislative leaders hope to work with Justice in a cordial manner but could not accept his proposal to require so much money from what are “statistically the poorest people in America.”

“The idea that if you just spend more in government, that somehow that’s going to make us prosperous, is not true,” Armstead said. “Expanding the size of government is not economic growth.”

Leaving money in the pockets of people and businesses will boost the economy, he said.

Carmichael said legislators are committed to having the budget completed by the end of the regular session. It won’t take long to put the document together once all bills that impact spending are complete, he said.

 

Legislature’s Budget Framework

The Legislature’s budget framework would cut $300 million from Gov. Jim Justice’s original budget proposal by:

* Eliminating the “Save Our State” Fund, saving $105.5 million

* “Smoothing” the Teachers’ Retirement System, saving $43.2 million

* Continuing 2-percent mid-year cuts implemented by former Gov. Earl Ray Tomblin, saving $43.2 million

* Not including Justice’s proposed 2-percent teacher pay increase, saving $21 million

* Eliminating greyhound subsidies, saving $15 million

* Ending the casino modernization subsidy, saving $9 million

* Foregoing Justice’s $5.6 million tourism advertising increase

* Redirecting a $38.3 million transfer for the Workers’ Compensation Fund

* Redirecting a $30.9 million General Revenue/Lottery Surplus transfer

* Foregoing a General Revenue transfer to the Division of Highways, saving $11.7 million

* Accepting a $2.8 million increase to the beer barrel tax (from $5.50 to $8)

* Recognizing a wholesale liquor markup increase from 28 percent to 32 percent (does not require legislation)

Source: Release from West Virginia Speaker of the House and Senate President

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