CHARLESTON, W.Va. — There are holes in the state budget, but no clear consensus at the State Capitol — with just more than two weeks left in the 2014 Regular Legislative Session — on how to plug those holes for this year and next year.
Senate President Jeff Kessler (D-Marshall, 2) said he thinks state lawmakers should raise the state cigarette tax to generate an estimated more than $90 million in the coming year, but that plan has hit a wall in the House of Delegates.
“We’re at a point with the down swing in our economy that, if we don’t raise some revenues, then we’re going to really have to raid our Rainy Day Fund and I don’t think that’s in the best long-term interests of the state’s finances,” said Kessler on Thursday’s MetroNews “Talkline.”
The current state tax on a pack of cigarettes in West Virginia is 55 cents. Kessler said Senate Democratic leaders have proposed taking that state tax to $1.55 a pack.
However, Kessler’s proposal was rejected outright by House of Delegates Democrats during a private caucus, according to House Speaker Tim Miley (D-Harrison).
“We were very frank in asking if there was support among the caucus members to support an increase in the cigarette tax, and there was not sufficient support for that,” Miley said. “There was very little support for that.”
Miley said his members also rebuffed a suggestion to increase the Consumer Sales Tax by one percent to seven percent.
Miley conceded election year politics played a “significant role” in the Democrats’ decision to reject all tax increases.
“There’s always some fear by all elected officials wondering whether constituents back home will support them if they vote in favor of any tax increase,” Miley said.
He added, however, and his leadership team is working on a counter proposal to try to fill the budget gap that is similar to the Governor’s plan of trimming $39 million from various accounts that receive lottery money.
Under the House plan, 15 percent would be cut from most accounts, including the thoroughbred and greyhound breeder funds, but only 10 percent of the money directed to counties and cities would be reduced.
Even so, officials will still have to dip into the emergency Rainy Day Fund for about $200 million of the $920 million fund to balance the budgets for this year and next.
Kessler might have been able to get the tobacco tax through the senate though some members are reluctant. Senator Bill Cole (R-Mercer, 6) said he does not know if he’ll support such an increase if it comes up for a vote in the Senate. “It seems easy, ‘Let’s tax people that have a bad habit,’ but if we utilize that, I guess we need to go after alcohol and foods that have too much fat in them,” he said.
“I am so against raising taxes, raising fees, breaking the backs of West Virginians yet one more time. I think we have so much housekeeping to do of our own.” Cole said he thinks significant savings could be found within current government operations.
Lawmakers will have to come up with an estimated more than $180 million to balance the budget, a requirement of state law.
Governor Earl Ray Tomblin has proposed a balanced budget that’s based on a combination of cuts in spending and passage of six bills to sweep a number of state accounts.
Kessler said there is “no appetite” to take $13 million from the Road Fund, which pays for road construction and maintenance, as Tomblin has proposed.
The Rainy Day Fund, which is designated for emergencies, now stands at $920 million. Up to now, it has not been used to balance the state’s budget. The ratio of the reserve compared with the state’s general fund determines West Virginia’s bond rating.
Kessler said he would not support taking more than 20 percent from the Rainy Day Fund. “If we don’t do the other (raise the cigarette tax), there is no choice other than to take it out of the Rainy Day Fund and I think that would be disastrous for us to raid that,” he said.
The 2014 Regular Legislative Session ends on Saturday, March 8 followed by a one week session focused on passage work.