By Phil Kabler
The Charleston Gazette-Mail
Now that we can officially declare a state budget impasse for a second year in a row, time for some FAQ about the budget crisis.
(I don’t want to say I told you so, but the events of the special session, as of press-time, have played out exactly as predicted here in past columns. The Senate’s 32-1 vote for the Justice/Senate tax compromise, Senate Bill 1004, doubles up the pressure on the House.)
Q: What’s causing the impasse?
A: Currently, tax revenue is bringing in about $4.05 billion a year, while the cost to maintain current levels of state programs and services is closer to $4.4 billion. So far, there’s no consensus on how or whether to close that funding gap.
Q: What’s causing the revenue shortfall?
A: Some legislators blame the economic downturn on the mythical “war on coal,” but while the downturn in coal production was built into budget estimates, plunging natural gas prices were not.
A more likely cause is that legislatures over the past decade cut tax revenue by more than $425 million a year, eliminating the sales tax on groceries, eliminating the state business franchise tax and cutting the corporate net tax from 8.5 percent to 6.5 percent. (As with the present proposal to cut income taxes, the business tax cuts were sold as economic stimulants, but have failed so far to attract sufficient new businesses and investment to offset the lost revenue.)
This contributed to what then-Revenue Secretary Bob Kiss described last year as a “significant structure hole” in the state’s finances, which he warned will devastate the state if not corrected.
Q: What’s the hold-up with the Justice/Senate compromise plan to raise revenue?
A: Complexity, for one. With so many components rolled into a single bill, it contains, as one lobbyist put it, something for everyone to dislike.
Some support income tax rate reductions, but object to a 1 percent increase in sales taxes. Others see that whole proposal as shifting tax burden from the wealthy to the working class, and point to the disastrous precedents in states like Kansas and Oklahoma that cut income taxes — without generating the promised economic growth.
Throw in the Grover Norquist-wannabes who oppose any tax increases of any kind, and rounding up enough votes in the House becomes a real quest.
Meanwhile, a proposal for tiered severance tax rates was a tacked-on sweetener to curry support of coal operators — Bob Murray in particular — that served to complicate the whole revenue plan, and antagonize natural gas and metallurgical coal producers, who stood to see rate increases under the initial version of the plan.
Q: Why not just cut spending to fit the available revenue, or as some legislators like to call it, to live within your means?
A: Based on the past two legislative sessions, it turns out talking about cutting spending is a lot easier than doing it, and evidently there is not as much waste, fraud and abuse in state government as critics thought.
Don’t forget that during his tenure, then-Gov. Earl Ray Tomblin cut general revenue spending by $600 million a year, or nearly 15 percent, so the non-catastrophic cuts in spending have already been made. (Addressed in the next item.)
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At the end of floor sessions, members are given the opportunity to make remarks.
Given the 24-hour news cycle that is being forced upon a curmudgeon like myself, during that time, there are tweets to post, and web versions of floor session coverage that need to be posted post haste, and those floor speeches tend to become something of background noise.
That’s why I don’t recall the name of the statesman who gave remarks in the regular session complaining about growth in state government, with the complaint that the state budget had grown just 12 percent in 10 years.
That caught my attention, with my thought being, that actually isn’t too bad. If you assume 1.5 percent annual inflation, the budget should have grown 15 percent in that time.
The 2006-07 general revenue budget was $3.95 billion. Adjusted for inflation, the 2016-17 general revenue budget, with no spending cuts, should have been $4.68 billion, not the actual budget of $4.19 billion — perhaps representing those $600 million a year of cuts imposed under Tomblin.
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Last year about this time, during last year’s version of the budget impasse, several legislators attempted to formally refuse their legislative per-diem pay, only to discover there is no mechanism in state law to permit elected officials to forgo their paychecks.
I mention that given the disingenuous campaign by the state Republican Party claiming that Gov. Jim Justice is breaking a campaign promise that he would not accept his salary as governor. As evidence, the party cites records from the auditor’s office showing the paychecks to Justice have been cut.
What the party fails to mention is that Justice introduced bills in both houses (Senate Bill 298, House Bill 2490) that would have given statewide elected officers the ability to voluntarily waive all or part of their compensation by signing a written waiver to be filed with the auditor’s office.
The House bill was sent to Judiciary, where it was never taken up. In the Senate, the Judiciary Committee took up the bill, amending it to state that anyone who waives their official compensation also waives the ability to participate in the PEIA health plan or the state pension fund. That bill went to Senate Finance, where it was never considered.
Nowhere in the state GOP propaganda is there a mention that the Republican-controlled Legislature killed Justice’s attempt to waive his pay.
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Former state senator Bill Laird is back for a second stint on the Lottery Commission.
He has been in public service since 1978, with a total of four terms as Fayette County sheriff, two terms in House and two terms in Senate, the latter ending in December 2016.
“I’m fairly pleased not to be wrestling with the problems they have today,” he said.
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Finally, in “Love and Death,” Woody Allen had a line to the effect of, “Don’t think of death as an end, but think of it as a very effective way to cut down on your expenses.”
To that end, a modest proposal would be to think of a state government shutdown not as a catastrophe, but as a very effective way to close the budget shortfall.
State government payroll runs about $65 million per pay period. Assuming that there would be some mechanism for keeping essential personnel, such as State Police troopers and correctional officers, on duty to be reimbursed at some point in the future, a couple of months of shutdown would probably save $150 million or so to go toward closing the shortfall.
Of course, it would be brutal for displaced state employees, since there would be no way to sign up for unemployment compensation — WorkForce West Virginia offices would be shut down — or any way to receive benefits during the shutdown.
Reach Phil Kabler at [email protected], 304-348-1220, or follow @PhilKabler on Twitter.