By Phil Kabler
For the West Virginia Press Association
CHARLESTON, W.Va. — Tensions between the Justice administration and the Republican-controlled Legislature escalated last week, when Gov. Jim Justice blamed legislative leadership for the latest downgrade of West Virginia’s bond ratings.
“This just tears at my guts. It’s the very reason I ran for this office,” Justice said during a news conference to announce that Moody’s Investors Service had downgraded the state’s bond rating from Aa1 to Aa2.
The Wall Street rating service cited the “recent multi-year trend of growing structural imbalance between annual expenditures and available resources” for the downgrade. Moody’s action follows state bond rating downgrades last year by the other “big three” credit rating agencies. Last April, Standard and Poor’s downgraded state bonds from AA to AA-, while in September, Fitch issued a downgrade from AA-plus to AA.
Justice used the downgrades to admonish a Legislature that he said has refused to address fundamental budget problems.
“All we want to do is kick the can down the road,” he complained, saying it is “time to wake up” and address the budget crisis.
In his State of the State address, Justice proposed raising some $400 million of taxes to help close a nearly $500 million shortfall in the 2017-18 state budget – a proposal largely rejected by legislative leaders who say they will present an alternative plan relying predominately on state budget cuts.
“If we think we’re going to cut to the bone, and we’re going to miraculously be able to cut our way out of this mess…there’s no chance on God’s earth we can ever even think about doing that,” Justice said.
Senate President Mitch Carmichael, R-Jackson, and House Speaker Tim Armstead, R-Kanawha, quickly fired back, blaming years of “tax-and-spend” policies by Democrats for leading to the current budget crisis.
Said Armstead, “The failed tax-and-spend policies of the past will not solve this problem. We need bold leadership to right-size our state government and restructure our tax code in a way that promotes growth. The proposal to increase spending by another $318 million and pay for it with the largest tax increase in the history of our state will not solve our budgetary challenge.”
Those comments, in turn, sparked heated floor debates in the House and Senate the next day, starting with House Minority Leader Tim Miley, D-Harrison, and Sen. Corey Palumbo, D-Kanawha, who challenged the “tax-and-spend” claims. They noted that the Legislature has only approved two tax increases in the past 14 years (both tobacco tax hikes), while eliminating the sales tax on food and reducing business taxes by more than $300 million a year.
Palumbo said the public expects results, not name-calling.
“They’re tired of the finger-pointing. They’re tired of the partisan politics,” Palumbo said. “People I’ve talked to don’t like that. They want us to shut up, and get our work done, and get this problem solved.”
Sen. Craig Blair, R-Berkeley, however, chastised Justice for calling legislators “knuckleheads” for not embracing his budget plan. Blair said he felt betrayed by the governor, whom he said he had campaigned last year promising no new taxes, then proposed some $400 million of tax hikes in his budget plan.
“We can’t go to the well, and ask our taxpayers for more money when they cannot afford it now, including our governor,” said Blair, waiving a clipping of a news article regarding $4.4 million in liens against Justice-owned companies for unpaid state taxes.
Legislative leadership said they will unveil an alternative budget proposal, one that relies heavily on spending cuts instead of tax hikes, in the near future.
Senate Finance Chairman Mike Hall, R-Putnam, assured senators that his committee is working on a budget plan.
“We’re not just sitting around doing nothing,” he said. “It is a top priority this year.”
Meanwhile, Justice upped the ante later in the week, saying he will submit legislation to give him authority to furlough state employees during the budget crisis.
“Because West Virginia’s finances are such a dog’s mess, furlough legislation is a necessary precaution to stop the bleeding if we don’t act,” Justice said, in typically colorful language.
While the bill would allow the governor to furlough state employees without pay, it will also spell out rights of employees to retain employee benefits during furloughs.
Last May, then-Gov Earl Ray Tomblin proposed similar legislation as a protection for state employees in the event of a state government shutdown if a state budget was not passed by July 1. Without a furlough provision, state employees would have to be terminated and rehired, potentially forfeiting seniority, pension and health care benefits, and pay grade.