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No budget deal, but Justice hopeful as regular session ends


Charleston Gazette-Mail

CHARLESTON, W.Va. — Time ran out on the 2017 regular session without passage of a budget bill, but with a one-day extension Sunday for the Legislature to attempt to work out what Gov. Jim Justice indicated earlier Saturday night could be a blockbuster compromise.

West Virginia Speaker of the House Tim Armstead pounds the gavel during the last day of the regular session of the Legislature on Saturday.
(Photo by F. Brian Ferguson)

That followed a frenetic and bizarre final two hours of the session to come up with a 2017-18 budget bill that closes a $500 million revenue shortfall.

With the budget bill seemingly in limbo to that point, Justice dropped a bombshell during a 10 p.m. press conference, declaring that he was nearing an agreement with Senate leadership on a budget bill that he said “doesn’t cut our higher ed, DHHR, or our K-12 [public education], and doesn’t devastate us.”

He said the agreement includes a 2 percent pay raise for teachers and “a little bit of money” for his Save our State program to recruit business investment to the state.

“We’re not there yet, but I really believe we’re right on the cusp of an agreement,” he said.

However, at about 10 minutes before midnight, the Senate passed on a party line 22-12 vote a much different version of the budget bill (HB2018), one that makes about $70 million of spending cuts and uses $90 million of Rainy Day emergency reserve funds to balance the budget. The House adjourned at midnight without taking the bill up for consideration, although the House was expected to vote on the bill early Sunday.

According to Justice, the potential budget agreement included a 1 percent increase in the sales tax, linked to a tiered plan to lower income tax rates, as well as a previously proposed 0.045 percent gross receipts tax on businesses, and surcharges for West Virginians with incomes of $200,000 or more.

Justice said the agreement also covered proposals to raise the gas tax and DMV fees, and to issue new Parkways Authority bonds, items in bills that had died in House Finance Committee at the end of the session. Those are parts of a road construction program that Justice said will create 48,000 jobs.

Shortly after, Senate President Mitch Carmichael, R-Jackson, who was leaving House chambers, said, “We have the framework for an agreement, but parts of it are fraying.”

While members of the Justice administration had been working throughout the day with Carmichael and Senate staff, indications were that House leadership was not intricately involved in the talks.

Earlier in the day House and Senate leaders spent the final day of the 2017 regular session shuttling back and forth from Capitol offices trying to work out a compromise on the budget bill — knowing that whatever they produced would likely be vetoed by Justice.

With the goal of passing a budget bill before the end of the session at midnight, legislators spent the day trying to close the gap between the Senate’s $4.102 billion budget — one that has no tax increases but makes major cuts to higher education, public education and health services — and the House of Delegate’s budget plan, which, at $4.24 billion, makes somewhat less severe spending cuts.

As for whether any budget compromise will survive Justice’s veto pen, House Finance Chairman Eric Nelson, R-Kanawha, said Saturday, “I think it’s to be determined.”

However, he added, “If I were a betting man, I’d say it’s going to get a big ‘X.’”

Nelson noted Justice has been unwilling to compromise beyond his $4.394 billion budget plan proposed in mid-March, often referred to as his Budget 2.0.

Justice’s proposal, which requires raising $224 million of new tax revenue, includes about $55 million in spending cuts. His initial budget proposal called for about $390 million in new taxes.

Leadership in both houses were adamant about getting some version of a budget bill passed and sent to the governor before midnight Saturday to avoid a repeat of last year, when the Legislature went home without passing a budget after three days in extended session. That ultimately resulted in 17 days in special session, spread out over two months, before the Legislature finally reached an agreement on the 2016-17 budget bill on June 14.

“It’s very important for us to put a budget before the governor,” Carmichael said.

Carmichael said leadership was essentially looking to split the difference between the two budgets, which effectively would require adding about $70 million of spending to the Senate plan.

With the Senate standing pat on a “live within our means” budget with no new taxes, that could involve raiding that amount of money out of the state Rainy Day emergency reserve funds. Recent Legislatures have taken more than $400 million out of the fund in recent years to balance state budgets, including taking $70 million to balance the 2016-17 budget.

“Nobody’s happy about that,” Carmichael said of possible use of Rainy Day funds. “That’s a solution of last resort, but we’re willing to do that to produce a budget.”

Traditionally, on the last day of the regular session, the Legislature puts the budget bill into a House-Senate conference committee, which spends three to as many as eight days in extended session to work out an agreement on the spending plan.

This year, Justice has extended the session for just one day for work on the budget through today, leading the Legislature to bypass the conference committee process and attempt to work out a compromise that could be approved on the Senate floor.

Earlier Saturday, Justice potentially added another $13 million hole to the legislative budget plan with a ceremony in Wheeling in which he vetoed a bill that would eliminate an annual state subsidy for greyhound racing purses at racetracks in Wheeling and Nitro (SB 437).

“If we get rid of greyhound racing, it will mean job losses and fewer people coming to West Virginia,” Justice said during the announcement at Independence Hall. “Eliminating support for the greyhounds is a job killer, and I can’t sign it. The last thing we need to do is drive more people out of West Virginia. We can’t turn our back on communities like Wheeling that benefit from dog racing.”

Proponents of the bill said the subsidy, which, according to a legislative study, accounts for 95 percent of racing purses, is unsustainable in the face of a $500 million budget deficit.

Opponents of the bill contended greyhound racing provides as many as 1,700 jobs in the state, and the elimination of racing revenue would be particularly harmful to Wheeling.

It was not immediately clear if the Legislature would attempt to override the veto, either before the end of the session or in pending special session.

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