By CHARLIE BOOTHE
Bluefield Daily Telegraph
CHARLESTON, W.Va. — Area legislators say they don’t know exactly what to expect when they head to Charleston today for a special budget session called by Gov. Jim Justice.
But three local members of the House make it clear they will not support a budget that includes tax increases currently floated by the Governor, and all four say they think today’s special session should have been called after a compromise had been reached.
“I feel very certain the House doesn’t buy into that plan,” said Del. Marty Gearheart, R-Mercer County. “The House will reject it.”
The plan Gearheart refers to is the Governor’s proposal to raise the sales tax a penny to 7 cents and broaden it by eliminating exceptions (food would be exempt). Along with that would be a gradual decrease in the personal income tax as well as increase in the corporate net income tax.
The Senate will go along with that because that body wants the elimination of the personal income tax, he added.
Gearheart said he expects the Senate to rush through the bill today and get it to the House.
“It will come to the House and I believe the House will defeat it,” he said.
Delegates John Shott, R-Mercer County, and Dr. Joe Ellington, R-Mercer County, agree.
“The latest we heard, the Governor is going to have four essential bills that are the building blocks for the budget revenue measure,” said Shott.
“I just think we are living on the Virginia border and we are at a disadvantage in so many ways,” he said, adding that he cannot support an increase in the general sales tax or the gas tax.
Ellington said he is not in favor of a sales tax increase either.
“I’m sticking with the budget we have,” he said, referring to the budget the Governor vetoed that did not include tax hikes.
But Del. Ed Evans, D-McDowell County, said he has no problem with the sales tax hike.
“My constituents say they are willing to pay a little extra to get the state out of the hole,” he said. “I don’t even think people will notice it.”
On the Senate side, Sen. Chandler Swope, R-District 6, said he does support the Governor’s proposal because the eventual elimination of the personal income tax will offset the sales tax increase.
“The end result will be no higher taxes at all,” he said, adding that eliminating the personal income tax is a way to bring more people, and a broader tax base, into the state.
All delegates said they are not necessarily opposed to a gradual decrease in the personal income tax, but it needs to be structured in a way to avoid tax hikes.
Justice announced Wednesday afternoon he will introduce four bills today, with the first including the sales tax hike, along with the income tax reduction and other initiatives.
Another bill will address road funding, which includes a gasoline tax increase of as much as 8 cents a gallon and an increase in Department of Motor Vehicle (DMV) fees.
All delegates, including Evans, are opposed to a gas tax hike.
Gearheart said that is how the Governor wants to finance the $1.6 billion bond voters will decide on in November.
“He intends to have that finance mechanism in place prior to the vote,” he said. “I am opposed to that.”
Shott said an increase in the gas tax, just like a sales tax hike, hurts border counties too much.
Evans said area people already often drive to Virginia to get gas, where it is as much as 20 cents a gallon or more cheaper.
“That (8 cents a gallon) is a lot of tax money,” he said.
But again Swope disagrees.
Calling road building and repair a “critical issue,” he said the highway money from the gas tax and DMV fee hikes amount to an investment in the state.
“The state is falling further and further behind on road and bridge repairs,” he said. “For every dollar we don’t spend on that now, it may cost five dollars down the road.”
But all agree that it would have been wiser for the Governor to wait until the budget negotiation process could have been given a chance to work out an agreement before the special session.
“No one has the specifics on what is in this special session,” Gearheart said. “We’re not sure what to expect.”
The Governor has been working with the Senate, he said, but the House has not usually been included in those discussions.
“I think it was a miscalculation on the Governor’s part to keep the House out of those negotiations,” he said. “Our special session may be wasting whatever amount taxpayers spend on it. He has not entered into any negotiations with the House.”
Although Gearheart said he can’t predict exactly what will happen today, it may end up being a one-day event.
“We may go back to the drawing board Friday,” he said, adding there would be no point in staying there until an agreement was worked out.
“We should not be going in (today),” Shott said. “There is no deal. Very few people understand what this is and the details (of the Governor’s proposals). There is no agreement between the Senate and the House. It was premature to call us in while so much work needed to be done.”
Shott has said in the past he and others were willing to work on a compromise, but that hasn’t happened.
“There are so many tax increases in his (Justice’s) budget plan I don’t think he’s going to get support on it,” he said.
Shott said if nothing is accomplished today, it would be best to wait a week or so and come up with a plan that may work.
Evans said this is first experience at a special session and he hopes something will be accomplished.
“I am concerned they will call us in the session and then call the finance committee into meetings, then what will the rest of us do?” he said. “I’m looking forward to see how the process works.
The delegates are also concerned about a proposal to reform the coal severance tax, using a tiering method that in essence would lower the tax during tough economic times then raise it during increased production.
“I like the idea of a sliding scale on the severance tax,” Evans said. “But I want to hear more about it. I don’t know the details of what he is proposing, especially related to thin seam, medium seam and high seam.”
But Evans said it does make sense that the tax should be lowered in difficult times to help coal companies maintain jobs, but only if it’s a fair plan for all the coal producers.
Shott said he doesn’t want to see the severance tax changed to the point it hurts the mining industry and he is concerned it would help some coal operators, but not others.
“The severance tax reform could hurt some mines,” he said, particularly mines that produce metallurgical coal, which is predominant in Southern West Virginia and which has been on an upswing.
If a hike in the severance tax comes with that increased production, it could be detrimental.
“We don’t want to cut into their ability to operate favorably,” he said. “We have so few mines open it will really jeopardize their ability to get back on their feet.”
The 5 percent severance tax is based on the tonnage of coal produced.
Another bill Justice is proposing relates to the Parkways Authority. Although the details were not released, in the past he has wanted to extend the tolls, make them free for state residents (coupled with an $8 a year hike in DMV fees) and increase them for out-of-state motorists.
The money raised would go toward roads.
The Governor has also included a bill to raise classroom teachers’ pay by 2 percent. But the details of how that will be financed have not been debated.
Both the House and the Senate will consider all four bills today. A final budget cannot be formulated until the total projected revenues are in place.
The Governor has proposed an almost $4.5 billion budget while the House budget he vetoed was based on $4.1 billion, using cuts and $90 million in the state’s fund balance to make up for a projected almost $500 million shortfall. But that bill did not include any tax hikes.
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