We’re just wrapping up the first full week of the 60-day legislative session and one of Governor Tomblin’s proposals is already in deep trouble—the six percent telecomm tax.
The Governor pitched the idea during his State of the State address last week. “Once adopted, this legislation will place the same six percent sales tax on cell phone and phone line usage, putting us in step with what is done in the vast majority of other states.”
Technically, the Governor wants to remove the sales tax exemption for telecommunications that currently exists in the law. That move would raise an estimated $60 million annually (about $20 million the remainder of this fiscal year) to help balance the state budget.
However, it’s difficult to find supporters in either chamber or either side of the aisle.
On the House side, Minority Leader Tim Miley (D-Harrison) says Democrats are universally opposed to it.
“Not a single member of the House Democratic caucus that I have talked with has voiced support for Governor Tomblin’s telecommunication tax proposal,” Miley told me, adding that simply bringing West Virginia in line with 41 other states does not justify imposing a new tax.
And that’s coming from a member of Tomblin’s own party!
Republicans in both chambers are already largely philosophically opposed to higher taxes, so it’s hard to imagine many, if any, members of the GOP getting behind the plan.
Senate President Bill Cole (R-Mercer) said there’s no support among his members for the telecomm tax. Minority Leader Jeff Kessler (D-Marshall) said Democrats have not talked about it in their caucus yet, and that’s the most encouraging news for Tomblin’s plan.
The Governor reportedly picked the telecomm tax out of a series of taxing options presented to him, believing that it would be the least painful. He thought it also had some appeal to those urging tax reform because it eliminated an exemption.
However, the Governor also proposed a tobacco tax increase. Lawmakers don’t want to pass two tax increases, particularly in an election year. Also, smokers are a smaller universe of people than landline and cell phone users.
If the telecomm tax is DOA, that leaves a sizable hole in the remaining budget for this year as well as next year’s spending plan, said Tomblin Communications Director Chris Stadelman.
“We’re open to ideas, but a balanced budget is required. ‘No, thanks,’ isn’t really an option without some suggestions for how to replace that,” Stadelman said.
Given the condition of the state’s economy and the already tight budget, it’s not going to be easy.