By David Beard
The Dominion Post
CHARLESTON, W.Va. — On day two of the special legislative session Friday, the Senate passed its revenue bill; an hour later, the House killed it. Both sides agreed to take a week off so leadership and the governor can negotiate without costing taxpayers $35,000 a day.
The governor ended the day by praising the Senate and panning House GOP leadership.
Once again, the main action of the day occurred late in the day, awaiting the conclusion of negotiations on SB 1004, the tax reform and revenue bill.
The Senate convened and agreed to an amended version of the bill introduced Thursday. The bill included reduced coal severance tax rates worked out with industry representatives, and an extra income tax bracket for individuals and couples making more than $300,000 that was proposed by Senate Democrats.
Based on the Republican majority’s willingness to accept Democrat input, Sen. Mike Romano, D-Harrison, endorsed the bill.
Senate President Mitch Carmichael, R-Jackson, praised the bill.
“This is a momentous occasion for the state of West Virginia,” he said. “What we are voting upon now is a $100 million tax cut for the citizens of West Virginia, the working families and wage earners. … It embraces perhaps the most optimistic vision for the state of West Virginia that has been voted upon for many years. It embraces growth, jobs and opportunity.”
The bill passed, 32-1, with one Democrat voting against it and one Republican absent.
Speaking to the press after the vote, Carmichael took pains to get his point across that the Senate views the bill as a tax cut. “I don’t want to understate the monumental accomplishment that occurred here in this state,” he said.
Fully expecting the House to kill the bill, he looked ahead to the week off, until the session resumes May 15. “We want to work this out as a three-party entity. … We want to hear all sides and find the sweet spot, and we will.”
Critics of the bill pointed out Revenue Department estimates that it will produce a surplus in the first year, but then lead to deficits.
As the Senate approved it, SB 1004 would raise the sales tax from 6 percent to 7 percent; eliminate sales tax exemptions for health and fitness club memberships, opinion research services, data processing services and highway construction and maintenance materials; create a telecommunications tax; reduce the number of income tax brackets and lower the rates while gradually phasing out the tax; exempt veterans’ retirement income from taxation; create tiered coal severance tax rates; and raise the corporate net income tax to 7.5 percent.
When the House received the bill, Majority Leader Daryl Cowles, R-Morgan, moved to reject it. Unlike Wednesday, Democrats put up a protest this time.
Delegate Andrew Byrd, D-Kanawha, moved to send the bill to the Finance Committee instead, to keep it alive during the break so it could be reviewed and amended. That stirred some debate but the motion failed, 34-58, and Cowles’ motion to kill the bill then passed, 59-34.
Speaker Tim Armstead had previously complained about being shut out of talks on the bill between the Senate and Gov. Jim Justice, but expressed some optimism about the coming interlude.
“While we don’t agree on this bill, we feel that there is some common ground that we can find over the next week and we are certainly looking forward to having that discussion, both with the Senate and hopefully with the governor. The House has spoken on this bill, and that is what actually gets us to step two,” which is negotiation.
Among the GOP majority’s objections, he said: The sales tax hike, the corporate net income tax hike and the structure of the income tax reductions.
“I truly do believe that it’s important that the House, the Senate and the governor be in the room together.”
He recommends a different approach. Instead of looking for revenue and working that into a budget framework, they should start with a budget and what the people can afford to pay for essential services, and see where reductions and efficiencies can be found.
During a post-session press conference, Justice called House leadership “childish” several times for not agreeing to the bill and not being willing to compromise.
Justice delivered his remarks with members of the House Democratic leadership behind him.
“This has been a monumental day, that’s all there is to it,” he said. The bill passed the Senate in a “complete, bipartisan effort.”
The bill has the support, he said, of both parties in the Senate, House Democrats and his office.
“All I want is goodness for our state. … I will not stand idly by and see others try to hurt our people.”
Justice agreed with Carmichael that the bill is a tax cut, not a hike.
Three other bills on the special session agenda remain alive. The Senate sent them to the Rules Committee to bring back out when the session resumes.
They are: SB 1001, to give teachers a 2 percent pay raise; SB 1002, the DMV fee/fuel tax bill to generate money for the Road Fund; and SB 1003, the Parkways bill, which raises turnpike tolls but allows state residents to pay a single $8 feel to obtain an E-Z Pass and ride the turnpike without tolls.