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WV Gov. Justice presents Budget Plan 2.0

By RUSTY MARKS

The State Journal

Faced with legislative opposition to his original budget plan, West Virginia Gov. Jim Justice presented a second budget proposal on Monday, Feb. 27.

“It’s another pathway,” Justice said at an afternoon news conference where he again utilized a white board and dry erase markers to illustrate his ideas. “It’s a pathway with less pain.”

Justice’s original budget plan, presented on the first day of the legislative session, called for $26 million in cuts, a half-cent increase in the state sales tax, a two-tenths-of-1-percent tax on corporate earnings and raising the wholesale taxes on beer and liquor to make up for a projected deficit of more than $450 million. The proposal also called for increasing Division of Motor Vehicles licensing fees from $30 to $50, increasing the tolls on the West Virginia Turnpike from $2 to $3 and raising the tax on a gallon of gasoline by 10 cents to pay for a proposed massive road-building program intended to put up to 48,000 people to work.

Justice’s new budget plan, which he said he worked much of the night on, keeps some aspects of the governor’s original plan but it also adds new proposals to take some of the bite out of the more unpopular parts of the original budget plan.

But Justice insisted a two-tiered approach to the state’s budget was required to balance the budget while simultaneously encouraging growth.

“The left side of the budget is balancing the budget,” Justice said. “Balance the budget without crippling us.

“On the right-hand side is our growth,” he continued. “And the component it has to have is immediate jobs.”

On the budget-balancing side of the equation, Justice proposed a new, 1-cent-per-ounce tax on sugary drinks. He says that tax would bring in $85 million in new revenue. An additional 50-cent tax on cigarettes would bring another $47.8 million, Justice said.

He also is proposed adding a $500 tax or fee for West Virginians who make more than $200,000 a year, a $750 tax or fee for residents who make more than $250,000 per year and a $1,000 tax for West Virginians who make more than $300,000. That would bring in about $8 million a year, Justice said.

Justice also proposed removing exemptions from sales tax for professional services — estimated to bring in about $79 million — and scaling back his $105 million special infrastructure line item by $35 million.

Smoothing out contributions for teachers retirement would save more than $40 million, Justice said.

Beer and liquor wholesale taxes would remain in the plan, but adding the new revenue measures would allow the governor to lower the original proposal to raise the state sales tax by half a cent to 1/4 of a cent, and would allow him to lower his tax on corporate earnings to .00075 percent. In the end, he said the plan would give the state a $63 million surplus.

He said the plan also doesn’t include additional cuts that might be undertaken by the Legislature. Justice said he would consider any reasonable cuts suggested by lawmakers, but said, “I am not for putting a dagger in the heart of West Virginia where it won’t recover.”

On the job-creating side of the puzzle, Justice proposed raising tolls on the Turnpike, this time from $2 to $4, with $2 of the money going to Turnpike maintenance and $2 to other road projects. Raising DMV fees from $30 to $50 is still part of his plan, but Justice would change motor vehicle inspection requirements from yearly to every three years to lessen the bite of the fee increase.

Justice also would offer residents an optional $8 annual E-ZPass fee that would allow residents to drive the Turnpike without any additional tolls or fees.

Finally, the governor proposed cutting his gas tax increase proposal from 10 cents a gallon to 4 1/2 cents.

State Senate President Mitch Carmichael, R-Jackson, has said the Senate will have a budget document ready within the next few weeks.

“We’re glad the governor has heard the concerns of our constituents with his initial proposals and are heartened to know he is open to alternatives,” Carmichael said Monday in a joint statement with House Speaker Tim Armstead, R-Kanawha. “Some of the ideas he brought up today — such as the smoothing proposal with the Teacher’s Retirement System — are suggestions we brought to the table during our meetings with the administration. We also agree that additional cuts of $50 million or more are needed, and we are carefully evaluating various options for significant cuts. We hope the Governor will continue to work with us on these and other ideas to close our budget gap.

“Like the governor, we agree we need to think big to solve our budget crisis. The Legislature has started work on major tax reform proposals that will spur economic growth. Members of our finance committees are working diligently to review the governor’s proposed budget to identify savings in each agency. We believe that their work with the governor’s cabinet secretaries will yield additional ways to increase efficiencies and save taxpayers money.

“We are working night and day to solve this budget crisis, and are putting forward our own alternatives. We are committed to doing everything we can to have a budget passed by this Legislature before we end our regular session on April 8.”

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