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Special session: Compromise coming for W.Va

By JOSELYN KING

The Intelligencer and Wheeling News-Register

WHEELING, W.Va.  — West Virginia lawmakers return to Charleston this week for a special session to set a state budget for 2018, and the session might be a long one if House members can’t be convinced tax hikes are necessary.

Delegate Mark Zatezalo, R-Hancock, left, speaks with Delegate Ed Evans, D-McDowell, during the recent regular session of the West Virginia Legislature.
(W.Va. Legislature photo)

The special session called by Gov. Jim Justice starts Thursday. Until then, Justice is working with Senate leadership to craft a proposed budget that would lower the state’s income tax rate, with the goal of eventually phasing out West Virginia’s income tax in the coming years.

The proposed budget also is likely to contain an idea to increase the state sales tax from 6 percent to 7 percent — a move that is not favored by lawmakers representing border counties.

House members, meanwhile, have largely opposed any raising of taxes in West Virginia. Legislation to impose a commercial activity tax (CAT) on businesses was shot down in the House this year 99-0.

The original budget proposal set forth by Justice in February called for more that $4.5 billion in spending in fiscal year 2018, while just over $4.1 billion in revenue is expected to be available.

“We’re going to have to have compromise somewhere,” said Sen. Charles Clements, R-Wetzel. “Apparently the Senate and the governor have some framework for an agreement, but it doesn’t fit with what the House wants. There’s always a question if it will pass the House.

“I know they are talking about tax reform and changes in the tax structure, and that’s always contentious. There’s going to have to be some hard negotiations. I’m sure they are working to get something in place so we don’t go in to the special session Thursday without a framework to work with.”

Justice vetoed the budget bill passed during the recent 60-day regular session of the legislature, and the current budget expires at the end of the fiscal year on June 30.

Senate Majority Leader Ryan Ferns, R-Ohio, confirmed Justice and Senate President Mitch Carmichael, R-Jackson, “have agreed to some positions” pertaining to a new budget proposal. But he said work continues on legislation, and no final decisions have been determined.

He also wonders if more time will be needed to craft a proposal that’s palatable to all sides.

“The House speaker (Tim Armstead, R-Kanawha) has made it clear he is not in agreement with what the governor has asked for,” Ferns said. “I think the governor’s calling for a special session now was premature…. I don’t think he should be calling us in yet.

“A lot can be accomplished outside special session. I wish he would have waited until we have an agreement, or until time was running out. To call us in now is a waste of time, energy and money.”

Sen. Ryan Weld, R-Brooke, said he understands the budget agreement being discussed would lower the state’s income tax rate, while reducing the current tax structure from five tax brackets to just three. To offset this, there also would be the 1 percent increase in sales tax.

“At the end of the day, everybody will come together and come to an agreement,” he said. “It may be one they don’t really like, but they will realize we have to have a budget by July 1.

“We can’t let personalities and personal pet peeves get in the way to getting a budget.”

In the House, Delegate Pat McGeehan, R-Hancock, serves as chairman of the conservative Liberty Caucus. He said he had “a couple polite phone conversations” with Justice last week about the budget.

“We found some common ground on areas of waste. I believe he is well-intentioned, but I disagree with many of his proposals,” McGeehan said. “I do think it’s a bit premature to go into a special session this week, with no agreed upon plan.

“What is most disturbing is the state Senate’s leadership team has pitched what amounts to the most asinine taxation scheme I have reviewed to date. Their plan calls for hundreds of millions of dollars in new taxes — which will squarely place a tremendous burden on small businesses, along with hitting the poorest in our society the hardest. It would seem many of these politicians have never picked up an economics books, much less actually read one. And these are the same state senators who just a couple months ago, told the public that we would live within our means, and not increase taxation. These kinds of inconsistencies are large reasons why there is so much distrust from the public anytime these politicians open their mouths in Charleston.”

He said he and other House conservatives “intend to hold the line” on any tax increases.

Delegate Erikka Storch, R-Ohio, said she doesn’t see much support in the House for any tax increases — especially sales tax increases that would affect border counties.

“I think this would just drive more people to Ohio to shop,” she said. “The majority of our population is in the border counties, and the governor is going to have to react to that.”

Any budget agreement achieved in the Legislature should have a long-term tax reform plan built into it, according to Delegate Mark Zatezalo, R-Hancock.

“The way I see it, there are two ways to go,” he said. “We can lower our income tax rate, or broaden our sales tax rate. There are plenty of states that have done one or both and been successful. Either way works out in the world….”

He said opposition to raising taxes is opposed not just by Republicans in the House, but by Democrats, as well.

“The House is committed to lowering income tax, “ Zatezalo said. “They will work with any plan to lower the income tax. “

Delegate Roger Romine, R-Tyler, expects the House will have to tweak any proposal sent to them by the Senate.

“It’s likely to have some sales tax increases and increases in other taxes,” he said. “There are legislators who have dug their heels in, and want no increase at all. I think there needs to be a combination. We have to have some new money, while at the same time cutting back and streamlining agencies.

“I don’t think the house will have a choice but to compromise — it just depends on how long it takes to reach a compromise. Hopefully, it can be done in two or three days.”

Among House Democrats, Delegate David Pethtel, D-Wetzel, agreed a compromise budget plan will have to be achieved.

“There probably needs to be a combination of both revenue enhancements and cuts,” he said. “I don’t think we can continue to just take money out of the Rainy Day Fund. The vetoed budget took $90 million out of the Rainy Day Fund.

“I’m trying to keep an open mind. We will know more when we talk with minority leaders on what our positions will be later in the week.”

Delegate Mike Ferro, D-Marshall, said he wasn’t aware yet of any details about the budget.

“I know the governor vetoed the last budget,” he said. “Then there was supposed to be an agreement on the last night of the session, but it didn’t come over that way.

“You need to talk to House leadership.”

Sen. Mike Maroney, R-Marshall; and Delegates Phil Diserio, D-Brooke; Joe Canestraro, D-Marshall; Shawn Fluharty, D-Ohio, did not immediately return messages seeking comment.

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