By Phil Kabler
For WV Press
With the 2020 legislative session only about three weeks away, December legislative interim meetings brought a heightened sense of urgency – and also brought a bit of good news for legislators.
Revenue Secretary Dave Hardy told legislators he is optimistic an upturn in tax collections through early December will put the state in a position to get through the 2019-20 budget year without having to make mid-year spending cuts.
“As of a couple of weeks ago, the end of November, there are no plans to do mid-year budget cuts,” Hardy told the interim Joint Committee on Finance.
In October, in the face of revenue shortfalls through the first three months of the budget year, Gov. Jim Justice directed agency heads to come up with ways to cut spending by a total of $100 million.
Hardy told legislators that a $9 million spike in early December tax collections – largely carryover from taxes due at the end of November that got pushed into December because state offices were closed for the long Thanksgiving holiday weekend – had shrunk the state budget shortfall to a manageable $31 million – or less than 1 percent of the state’s $4.7 billion general revenue budget.
Deputy Revenue Secretary Mark Muchow told legislators the size of the shortfall is encouraging, considering that state severance tax collections have plunged 43 percent from last year, as a nationwide glut of natural gas is depressing prices for both gas and steam coal used in electricity production.
He said state coal production is down nearly 10 percent from last year.
While on the subject of taxes, committee members were encouraged to take another crack at reducing a tax state manufacturers have long opposed, the personal property tax on business inventory, machinery and equipment.
Rebecca McPhail, president of the West Virginia Manufacturer’s Association, told legislators Monday the tax puts West Virginia companies at a competitive disadvantage. West Virginia is one of only seven states with a tax on business inventory, and one of two without waivers on those taxes.
Mike Graney, executive director of the state Development Office, said the state does what it can in terms of workarounds to help companies get around the tax, including having the state buy equipment and leasing it to the companies.
However, he said many companies simply write off West Virginia because of the tax, adding, “We don’t even know how many companies we miss.”
Also during December legislative interim meetings:
| Legislators objected to state plans to auction off the $32 million Heartland Intermodal Gateway in Prichard, Wayne County, for as little as $1 million, after the complex shut down operations this fall.
“It was probably a good idea. It just did not work at all,” Transportation Secretary Byrd White said of the complex, which opened in December 2015 with the goal of loading and unloading 15,000 rail-to-truck containers a year.
White said the facility never reached even 1,500 containers a year, with some months having as few as 20 containers loaded or off-loaded from trains. That resulted in Norfolk Southern railroad ending train service to the complex as of Oct. 1.
Sen. Robert Plymale, D-Wayne, objected to state plans to hire a real estate auction company to auction off the property early next year, arguing that the complex had, and still has, great potential. He blamed the state officials for frittering away an economic opportunity.
“For the last 5 or 6 years, this has been so mishandled by the DoT and the Port Authority,” Plymale told White, adding, “I’ve seen a lot of bad stuff, but I’ve never seen anything so mishandled…I’m sorry you were handed this, but I still don’t think you’re handling it right.”
The facility is part of the $290 million Heartland Corridor project, which permits double-stacked intermodal trains to operate from Norfolk, Va., to Columbus and to Chicago.
| Legislators questioned why the PEIA Task Force – created by Gov. Jim Justice in 2018 to find a long-term “fix” for rising costs for the state-managed health insurance plan – has not met for almost a year.
“If they’re not meeting, it sounds like that was their fix – to throw money at the problem,” Delegate Randy Swartzmiller, D-Hancock, said of the task force.
At the behest of Justice and the task force, the Legislature appropriated $105 million of 2018-19 budget surplus for a PEIA rainy day fund that will allow the agency to avoid premium increases or benefits cuts until that money runs out sometime in 2022.
