Late twist revives WV Gov. Justice’s revenue plan

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W.Va. Gov. Jim Justice

A tumultuous 19th day of the special session was marked by yet another twist Thursday evening, as the Senate dramatically passed the seemingly umpteenth version of Gov. Jim Justice’s revenue plan on a 30-2 vote (Senate Bill 1017).

That vote came at 8:20 p.m., some eight hours after a meeting Justice held with legislators to pitch his latest proposal seemed to end disastrously, with a mass walkout of all but Senate Republicans, and only hours after Justice introduced his latest revenue compromise bill in the Senate.

The new plan is similar to earlier proposals, with an increase in the state sales tax from 6 to 6.5 percent, with eliminations of some tax exemptions, the largest being for telecommunications services. It also includes a tiered severance tax system, intended to give tax breaks to mines producing low-priced steam coal.

Notable changes include slowing down an income tax phase-out from a three-year, 20 percent cut, to 5 percent annual reductions, with cuts after the first year occurring only if overall revenue growth beats five-year rolling averages. The plan also provides income tax rebates for individuals with incomes of $25,000 or less.

The new revenue plan would provide for a $4.349 billion general revenue budget, nearly $125 million more than plans currently proposed in the House and Senate.

That would be enough funding to fulfill Justice’s proposals for teacher pay raises, a Save Our State economic development fund, additional tourism promotion funding, along with no cuts to Medicaid and minimal reductions to higher education.

The bill goes to the House of Delegates, which has resoundingly rejected three earlier versions of the governor’s revenue plan, a point Senate Judiciary Chairman Charlie Trump, R-Morgan, made Thursday evening in a direct appeal to delegates.

“This bill that we send to you tonight is worthy of your consideration,” he said. “Let’s do something now that could truly be transformative to West Virginia.”

Thursday afternoon, Justice issued a video urging support for his new plan.

“If we’re not able to get this through, basically what’s going to happen is terrible things, big cuts,” he said. “We’re going to hurt a lot, a lot of people we don’t need to be hurting.”

Thursday evening’s developments marked a notable change of atmosphere from earlier in the day, when tempers flared and vote counts fluctuated as hopes of resolving the 43-day impasse on the 2017-18 West Virginia budget plan took, in the words of House Speaker Tim Armstead, R-Kanawha, “a step backwards.”

Two key issues marked the day: First, doubts that the House of Delegates has enough votes to pass a bill to raise gas taxes and Division of Motor Vehicles fees to help fund Gov. Jim Justice’s plan to sell up to $2.8 billion in highways construction bonds to stimulate the state economy.

A second issue was the Legislature’s initial reaction to Justice’s pitch on his latest revenue plan, during a closed-door meeting Thursday morning.

After a reportedly tense hour of give-and-take, the meeting in the governor’s conference room ended abruptly with a mass walkout of all legislators but Senate Republicans, reportedly after Sen. Robert Karnes, R-Upshur, angrily blamed the state’s budget woes on 80 years of Democrat control of state government.

Armstead said Thursday afternoon he emphatically stressed to Justice during the meeting that there is little to no support in the House for any proposal in the special session for any type of income tax cuts.

“If he’s insistent on that, then he’s closing the government down. There’s no question about that,” Armstead said.

The state government will partially shut down July 1, if the 2017-18 budget has not been enacted.

The latest revenue plan, which was opposed Thursday only by Sens. John Unger, D-Berkeley, and Mike Woelfel, D-Cabell, will reach the House Friday morning.

In interviews Wednesday, Justice denounced the $4.225 billion budget alternatives passed in the House and Senate, saying the plans would cause “carnage” with major spending cuts, and suggesting that he would veto either bill, as he did with a $4.1 billion budget plan passed by the Legislature in April, in the waning moments of the regular session.

Also Thursday, the House of Delegates postponed a passage vote on a key component of the budget plan, legislation to raise the state gas tax and various DMV fees to raise about $130 million for Justice’s road building program, with Armstead conceding Thursday that he’s uncertain that there are sufficient votes in the House to pass the bill (Senate Bill 1006).

“I think the governor, over the last few days, has lost some votes on that bill,” Armstead said.

Asked if that leaves enough votes to pass the bill in the House, Armstead said, “I don’t know. The more we have people going down the rabbit holes on personal income taxes, then that becomes questionable.”

That vote is critical, since Justice on Tuesday raised estimates for 2017-18 state revenue collection by about $170 million, from $4.055 billion to $4.225 billion, in part based on the anticipated economic stimulus of the new construction jobs that the road-funding bill would provide.

That anticipated new revenue already is built into both the House and Senate versions of the budget bill, as well as Justice’s budget proposal.

The House and Senate have each passed budget bills using that $4.225 billion figure, with the House version shifting about $52 million in funds to soften $67 million in additional spending cuts — mainly targeting higher education and Medicaid — in the Senate version.

Armstead called the House version of the budget bill a responsible plan that minimizes cuts to higher education and Medicaid.

“He needs to sign that budget and put everyones’ minds at ease,” Armstead said.

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

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