At the Capitol: Little finalized on the budget

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By Phil Kabler

After a total of 15 days in special session, legislators adjourned for the weekend on Friday, with the bulk of issues – a revenue plan, 2017-18 budget bill, funding for the governor’s road-building initiatives, and a furlough plan for state employees in the event of a state government shutdown – still pending.

Legislators will have less than three weeks to enact a budget bill before the new budget year begins July 1 to avert that shutdown.

On Friday, legislators voted to allow a House-Senate conference committee to continue meeting through Tuesday to come up with a plan to raise enough revenue to balance the 2017-18 budget – even though delegates on both sides of the aisle have said there are not enough votes to pass that committee’s proposal in the House.

“We all know the votes aren’t here for what the Senate’s trying to do,” Delegate Isaac Sponaugle, D-Preston, said Friday.

“Senate Republicans are literally trying to shut the state of West Virginia down because they want tax reform,” he added.

Going back to the regular session, Senate Republicans have been pushing for reductions in state income taxes as part of any revenue plan.

As of Friday, the House-Senate conferees were reaching consensus on a plan to raise the state sales tax to 6.5 percent and to eliminate several exemptions on sales taxes – the largest being an exemption on telecommunications services, including cellphone plans.

That proposal also calls for reducing income taxes by 7 percent effective Jan 1, 2018, with additional cuts of 7 percent and 6 percent – if there is sufficient growth in the state economy to offset those cuts.

Setting those economic “triggers” has been a point of contention for the House-Senate conferees, with proponents of the tax cuts opposing thresholds that would be so high as to be unattainable, and with opponents fearing that if the triggers are too low, potentially devastating cuts to state revenue will result.

In a possibly unprecedented appearance before the committee on Thursday, Gov. Jim Justice called on legislators to support the proposal, saying, “Don’t be afraid, because it’s going to work.”

Justice said he would like to see the triggers incorporate new job creation as a threshold.

“I would say to you, just be cautious, don’t be reckless, because it’s going to work,” he told the conferees.

“If you have the proper triggers, the idea the sky is falling in the out years is boogieman stuff,” Justice said.

However, Senate Minority Leader Roman Prezioso, D-Marion, likened the triggers to roll back income taxes to a game of Russian roulette.

“I just hope before we pull that trigger, there’s not a bullet in the chamber that sends us off that (fiscal) cliff,” said Prezioso, a member of the conference committee.

Conferees met for about 10 minutes Friday afternoon, before recessing to 9 a.m. Monday morning, “to give members time to think things through,” House Finance Chairman Eric Nelson, R-Kanawha, the committee co-chairman, said. Conferees canceled a previously announced meeting for 10 a.m. Saturday.

Even if the conferees come up with a proposal on the income tax cuts, it will have to win approval in a House of Delegates that has rejected similar proposals three times previously, most recently, in a 85-0 rejection vote on May 24.

Delegate Bill Anderson, R-Wood, stressed that the House has “spoken clearly, empathically several times” that it is not going to vote for the income tax rollback.

“I call upon the governor to reconsider his position on supporting personal income tax reduction at this time,” he said.

House Minority Leader Tim Miley, D-Harrison, said he believes there are very few votes in the Democrat caucus for the current plan, which would automatically roll back income taxes 7 percent on Jan. 1, 2018, and said he’s not sure how many votes the plan would pick up if there were an economic trigger required for that first 7 percent reduction.

Miley voted to extend the conference committee, but said, “I don’t like giving the extension because I think we’re delaying the inevitable.”

Despite House opposition, Senate President Mitch Carmichael, R-Jackson, said it would be “ridiculous” to back off the proposed income tax cuts, saying, “If we’re going to bring additional revenue to the table in the short-term, we’re going to do it in the context of tax reform.”

Meanwhile, as Justice noted, state employees are “stressed and worried” about potential furloughs or layoffs if legislators fail to enact a 2017-18 budget bill before July 1.

Last year, legislators met in special session for a total of 17 days before passing the 2016-17 state budget on June 14 – milestones that the current Legislature appears likely to break.