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Long-shot 1% WV sales tax hike mulled

CHRIS DORST | Gazette-Mail

With a state government shutdown looming a month away, West Virginia’s Senate Finance Committee spent Tuesday on a long-shot attempt to resurrect a 1 percent increase in the consumer sales tax.

“I don’t know if it’s a Hail Mary, but it’s definitely a long pass,” Senate Finance Chairman Mike Hall, R-Putnam, said of the efforts to bring back a bill (SB 1003) that was immediately quashed by House and Senate leaders when the special session began on May 16. The bill was one of three revenue measures proposed by Gov. Earl Ray Tomblin.

Senate leaders brought it back after the defeat last week of a tobacco tax increase in the House of Delegates, and with the likelihood Tomblin will veto the Legislature’s current 2016-17 budget plan — which heavily raids the state’s Rainy Day emergency reserve funds to close a $270 million budget shortfall.

Hall said he’s playing a hunch that voters would be more tolerant of a small, broad-based tax increase that affects all consumers, as opposed to the tobacco tax, which imposes a steep increase on a portion of Mountain State citizens.

“This seems to be at the top of the list of the man on the street trying to counsel us on what to do,” Hall said.

A temporary 1 percent increase in the sales tax also would go further in closing the budget shortfall than the tobacco tax, raising $196 million in the 2016-17 budget year, and $214 million for each of the next two fiscal years, according to state Tax Department estimates.

Meanwhile, state Budget Office Director Mike McKown warned committee members that using Rainy Day and one-time funds to close the 2016-17 budget shortfall will only exacerbate future shortfalls, creating budget gaps of at least $380 million in fiscal 2018 and 2019.

Committee members delayed a vote on the bill until this morning in hopes of coming up with an amendment setting a trigger to repeal the 1 percent increase early if there is a strong upturn in the state economy before the proposed June 30, 2019, sunset date for the tax hike.

Given the long-shot nature of the bill, neither Hall nor Senate President Bill Cole, R-Mercer, were confident Tuesday that it could pass the Senate, let alone survive a House vote.

“Given the crisis that looms, part of the process of the Legislature is people becoming more aware of circumstances,” Hall said.

Meanwhile, Bridget Lambert, of the West Virginia Retailers Association, said she’s concerned about the impact a 1 percent sales tax increase could have on retailers in border counties.

On Tuesday, Deputy Revenue Secretary Mark Muchow said municipalities in Ohio border counties, as well as in Pittsburgh’s Allegheny County, currently have 7 percent sales tax rates, while municipalities in Virginia have 6 percent sales taxes and a 2.5 percent sales tax on food.

Little happened, otherwise, Tuesday, which was day 11 of the special session and day 80 of the state budget impasse.

The House held a brief floor session, took up no bills and held no committee meetings. The Senate laid over consideration of the budget bill (SB 1001) for a fifth day, while only the Finance Committee met.

Also during the special session Tuesday:

n Senate Democrats gave floor speeches berating the lack of progress as the special session on the budget began its third week.

“Mr. President, we need money. We are broke,” declared Senate Minority Leader Jeff Kessler, D-Marshall, who said it is irresponsible to wait until after the November election or until the 2017 legislative session to pass tax increases.

Kessler said that if the Senate passes a budget relying on up to $200 million in Rainy Day funds, “The governor’s going to veto it before we’re halfway up the road.”

Sen. Mike Romano, D-Harrison, accused the Legislature of “just going through the motions” of passing a budget bill, contending that the current budget plan is “as worthless as the paper it’s written on.”

“We’re not going to create any jobs. We’re not going to get the economy moving. We’re not going to help the Southern coalfields,” Romano complained.

Asked in an inquiry of the chair by Sen. John Unger, D-Berkeley, about plans for resolving the budget impasse, Cole said there are ongoing discussions between himself, House Speaker Tim Armstead, R-Kanawha, and the governor.

“I don’t want to be here any worse — any more than anyone else, so we’re working hard to that end,” Cole said of the extended special session.

n Cole hosted a gubernatorial fundraiser at the Town Center Marriott Tuesday evening, despite a pledge before the regular session not to campaign while the Legislature is in session.

Cole noted Tuesday the event already had been rescheduled from May 25, and the special guest, former Texas Gov. Rick Perry, already had changed his plans once to attend.

“There’s nothing going on that involves me at 5:30 this evening in the Legislature,” said Cole, referring to the starting time for the fundraiser.

He added, “I’m not a billionaire. If I’m going to run for governor, I’m going to have to figure out where I can raise a bit of money.”

Cole’s Democratic opponent, Jim Justice, is a billionaire, according to published reports.

n Unger filed an amendment to the budget bill that would put it back to the original draft submitted by Tomblin at the start of the session. If adopted, the amended budget would mandate that the Legislature pass one or more revenue measures to balance the budget.

Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220 or follow @PhilKabler on Twitter.

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