By JOSELYN KING
The Intelligencer and Wheeling News-Register
WHEELING, W.Va. — West Virginia legislative leaders discussed a new budget proposal during negotiations with Gov. Jim Justice Tuesday night, and their next move is to explain it to their members.
Details of the spending proposal provided by House Speaker Tim Armstead, R-Kanawha, show the new plan for a budget touching on all ideas proposed by both the House and Senate — though in a watered-down fashion from previous plans set forth.
The latest proposal would raise West Virginia’s sales tax from 6 percent to 6.35 percent, with a provision to roll the rate back to 6 percent if economic conditions don’t improve. A prior plan passed by the Senate would set the sales tax at 7.25 percent.
The new proposal also sets forth an across-the-board, 7-percent personal income tax reduction beginning in 2018, with additional decreases of 7 percent for 2018 and 6 percent in the following years if economic triggers are achieved.
The income tax on social security for those making $50,000 or less would be phased in over the next three years. The Senate previously passed legislation setting the amount at $75,000; and the House, $100,000.
Included in the new proposal also is a scaled-back version of the sliding scale for severance tax — which would be imposed only on coal revenue, and not for natural gas.
There would be cuts to higher education and the Department of Health and Human Resources over the next six years.
The proposal contains no plan to raise the state gas tax, but would raise the floor of the wholesale tax to $3.04. The privilege tax on car purchases would jump from 5 percent to 6 percent.
The personal income tax exemption for those making $50,000 or less would be increased from $2,000 to $2,500 effective Jan. 1, 2018, and military income would no longer be taxed.
Calls to both Armstead and Senate President Mitch Carmichael, R-Jackson, weren’t immediately returned Wednesday.
“To clarify, there’s no agreement at this time,” said House Communications Director Jared Hunt. “Various options have been discussed over the course of negotiations with all the parties, but those are only draft proposals and not publicly available. … At this time, House leaders aren’t commenting on the status of negotiations or possible options that have been discussed until they have the chance to discuss that first with their caucus.”
House members are scheduled to learn more about the plan during a conference call late today, while Senate members also are to be briefed on its details sometime today.
Senate Majority Leader Ryan Ferns, R-Ohio, said he wasn’t present in Charleston for the negotiations on Tuesday. If he were, he said, he would only have been privy to discussions that occurred between Justice and Senate Republicans.
“It’s not earth-shattering. It’s just another proposal by the governor in an attempt to gain support in the House,” Ferns said. “Whether or not that will be successful remains to be seen.”
And Ferns said the most frustrating aspect about the current budget debacle is that the House hasn’t been clear on just what they want to include in the budget bill.
“I have no idea what the House finds palatable,” he said. “They have only said what they weren’t willing to do, and not what they want to do. They have only said they wouldn’t consider any increase in tax, but this plan contains a sales tax (increase). What they are willing to accept is difficult to determine.”
Ferns said it hasn’t been determined yet how much this plan would raise taxes on the public, and that it will take a few days for those numbers to be available from the governor.
Delegate Erikka Storch, R-Ohio, said she doesn’t understand why there needs to be a hike in taxes.
“We’re looking for $250 million in the budget, but that is additional new spending proposed by the governor next year,” she said. “We might have to find some additional funding to cover the costs of providing existing programs — but most of the $250 million is additional spending.”
Storch said she doesn’t understand why Justice, the Senate and Senate leadership are pushing toward revising personal income tax rates.
“And I don’t like raising the sales tax,” she said. “We have 100 House members with 100 different ideas and 100 different opinions.”
Delegate Patrick McGeehan, R-Hancock, estimates the new proposal would increase taxation by at least $300 million.
“There probably should be some thought put into how economic conditions could be damaged in the future with that sort of plan,” McGeehan said. “But inside the government, the long-term consequences often tend to be discounted.”
Delegate Shawn Fluharty, D-Ohio, also remains skeptical.
“The proposal may gain more support, but it still includes Senate leadership’s fictional economics of raising various taxes and making us less competitive with our neighbors — all while cutting income taxes for their wealthy campaign contributors,” he said.
The Legislature is set to reconvene its special session at 11 a.m. Monday.
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