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West Virginia Senate President: revenue bill represents $119M in tax cuts


The Intelligencer and Wheeling News-Register

WHEELING, W.Va. — West Virginia Senate President Mitch Carmichael says a revenue bill to be considered by the Legislature this week is itself not a tax increase, but instead represents a nearly $119 million tax cut next year for West Virginians.

Senate President Mitch Carmichael

The revenue bill is one of four pieces of legislation expected to be considered when state lawmakers reconvene at 11 a.m. Monday for a special session in Charleston and attempt to iron out the details for next year’s state budget. Among the three other measures, two do represent tax increases.

The “Senate-Governor Tax Reduction Act of 2017” — listed as Senate Bill 1004 — already was passed by the Senate during the first days of the special session earlier this month, but was quickly rejected by the House. House leadership had no role in drafting the bill or any in the four-bill package, and members thus far have been opposed to any tax increase by the state.

Carmichael emphasized that SB 1004 is separate legislation from the other three bills that are part of the budget package.

“This bill (SB 1004) is being misconstrued — it’s a straight-up tax cut for West Virginians,” he said. “The perception is the House is holding out on this because it is a tax increase, but nothing could be further from the truth. … There has never been a bill around here that was a guaranteed tax cut in this manner. It represents the most Republican, optimistic vision for our state’s economy that we’ve had in years. There’s no reason a legislative body led by Republicans should be opposed.”

Carmichael pointed out the measure passed the Senate with a 32-1 bipartisan vote. In the House, it was defeated 59-34, with Republicans largely voting in opposition.

He confirmed House leadership has been involved this week in discussions pertaining to the overall budget package.

The Legislature passed a budget during its recent regular session that set the state’s spending for 2018 at about $4 billion.

Details of the “Senate-Governor Tax Reduction Act of 2017”

SB 1004 starts off by lowering the state’s personal income tax rates effective Jan. 1, resulting in a tax cut estimated at $400 million that’s weighted toward lower wage-earners.

Information provided by the House Clerk’s Office shows that someone earning $20,000 annually is subject to a $700 state income tax each year. The proposed legislation would drop this rate to $400 a year.

At the high end, someone with an annual income of $200,000 presently pays $11,875 each year in income tax. This rate would decrease to $10,195. Additional cuts could come in future years if financial triggers are reached, according to Carmichael.

The historic structures renovation tax credit passed by lawmakers this year would remain under SB 1004 at a cost of $1.6 million to the state.

Offsetting the $400 million in tax cuts would be tax hikes estimated to generate almost $281.2 million. Starting July 1, the state sales tax would jump from 6 percent to 7 percent — with an estimated $200 million to be generated by the hike in fiscal year 2018, according to information provided by the Senate Clerk’s office.

Cellphone and other telecommunications services would no longer be excluded from the sales tax, resulting in an additional $55 million in tax revenue.

The corporate net income tax would be increased from 6.5 percent to 7 percent, and this is expected to garner another $18 million in additional tax revenue. The elimination of “loopholes” in state tax law would bring in almost $8.2 million.

Carmichael said the abolishment of the West Virginia Dog Breeder’s Fund — contained in a measure passed this year by the Legislature but vetoed by Gov. Jim Justice — isn’t likely to be part of any new budget discussions.

“I don’t think that will happen at all,” he said.

The total amount of the tax cuts contained within the revenue bill, offset by the increases in the sales and corporate tax hikes, equals about $118.8 million, according to the Senate Clerk’s Office.

“Better Roads Bill” means tax increases

West Virginia motorists would be paying a higher tax on gasoline, and more for vehicle licensing and other fees assessed by the Department of Motor Vehicles under SB 1002 — a second component of the budget package going before lawmakers this week.

If approved, the tax increases together would generate about $129 million annually for the state, according to the Senate Clerk’s Office. This money could be used to initiate road projects.

Gov. Jim Justice has proposed a list of nearly $3 billion in needed road projects in West Virginia, and he estimates more than 48,000 construction jobs would be created if the money is found to do the work.

SB 1002 would hike the annual drivers license registration fee paid by drivers in the state from $28.50 to $50 effective July 1. These fees have not been adjusted in more than 30 years,

West Virginia’s gasoline tax also would jump a total of 8 cents per gallon, with 3.5 cents of the increase to be directed to highway maintenance.

Information provided by the Senate Clerk’s Office indicates gasoline tax collections dedicated to road repairs have dropped $53 million in the last four years because of declining gasoline prices.

In fiscal year 2014, gas prices came in at an average of $3.68 per gallon, resulting in collections of $441 million. This year, the average price has been $2.25, with collections thus far at $388 million.

SB 1003, meanwhile, grants permission to the West Virginia Parkways Authority to issue revenue bonds and refunding bonds for the purpose of financing parkway projects. The measure calls for the authority to study, investigate and later implement a flat fee program that would charge West Virginia licensed drivers a single fee to drive on the West Virginia Turnpike.

And SB 101, if approved, would provide a 2-percent raise to teachers.

What House Republicans say

Delegate Mark Zatezalo, R-Hancock, isn’t certain what will happen when lawmakers return to Charleston this week.

Del. Pat McGeehan, R-Hancock

“I don’t know. I don’t think anybody knows,” he said. “I know cutting the income tax to zero doesn’t score well. We want to make sure we are on steady ground before we do anything. We can agree to some of this if some of the questions are answered.”

Zatezalo said he knows there is no Democratic support for a tax increase in the House as they voted against the tax increases proposed by their own Democratic governor, Justice. In one such vote, the House voted down Justice’s commercial activities tax proposal 99-0.

“If you have no appetite to raise taxes, then you have to go with a budget that lives within your means,” he said. “I understand what the Senate is doing, but I don’t understand what the revenue looks like. There are a lot of considerations that must be taken into account. I do think everybody understands better now, and we might be able to come to some agreement on it.”

Delegate Pat McGeehan, R-Hancock, said he won’t know what is being proposed until it comes before him in Charleston.

“I don’t know what the proposal is yet,” he said. “I haven’t been officially informed of any details, or what negotiations have produced. It’s not rocket science. You just reduce spending, balance the budget and pass it.”

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