CHARLESTON, W.Va. — The state Senate passed a tax reform bill and the House of Delegates didn’t.
So over the next nine days the one bill will be the focus of a lot of attention from the House, the Senate and also the governor.
All sides admit the bill, Senate Bill 409, isn’t their idea of perfect. But it is likely to be one of the big tools for resolving the state’s half-billion-dollar budget gap for the coming fiscal year.
“There are components of the Senate’s bill that we’ve got a lot of support for over here,” House Speaker Tim Armstead said Wednesday evening.
“I think there’s support for some components of the House bill. They’re somewhat different details. But the concept of tax reform is present in both those bills.”
Senate Bill 409 bears the burden of serving multiple roles for multiple people. It was conceived as a tax reform bill, meant to broaden the state’s consumer sales tax and reduce the income tax brackets from five to three, eventually phasing out the income tax entirely.
But it’s also being seen as a way to balance the state budget for the coming year, probably through eliminating exemptions to the state’s sales tax a few months before tinkering with the income tax. It could wind up raising the sales tax and reinstating the food tax, although it’s not yet clear how much acceptance there is in the Legislature for those.
The Senate’s tax bill, the focus of attention all session, was the subject of stops and starts. An earlier version, Senate Bill 335, was a more ambitious and more complicated version that took criticism over a fiscal note showing a negative $610 million effect on the state budget by 2021.
The House tax reform bill, 2933, had a quieter path but gained momentum and influence last weekend when the House Finance Committee took it up and then revealed it as a centerpiece of a possible state budget plan.
That one also would have broadened the sales tax for a range of categories, but it would have lowered it from 6 percent to five. It would have reinstituted a 3 percent food tax. And it would have established a flat 5.1 percent income tax.
The House’s bill ran into rocky ground on first reading Saturday when it narrowly survived a challenge from delegates who disagreed with a variety of the tax components.
But the bill captured the attention of Gov. Jim Justice and its staff because of estimates that it could raise $170 million or so in revenue while helping the state avoid major cuts to education, higher education and healthcare.
Both bills were up for passage votes on Wednesday, which was crossover day, the deadline for most bills to be passed out of their houses of origin.
The Senate took its version up relatively early, before noon. And it got a boost from a somewhat surprising source, Senate Finance Chairman Mike Hall, who had not been an early sponsor of the bill even when most of his GOP colleagues were.
Hall also expressed reservations about the bill as it was considered in Finance Committee and wound up voting against its passage there.
But Hall said on the Senate floor Wednesday that he would be voting for the bill. The context, he said, was the importance the House’s tax reform had taken on as the focus of budget discussions but also the uncertainty that had arisen over whether the House bill would actually pass.
“So I’m in an awkward spot today, and that is to support this bill to keep the process moving. It’s not a perfect position,” said Hall, R-Putnam.
The Senate bill passed 22 to 12. Hall’s explanation was a sign of what was to come..
The House moved its version of the tax reform bill to its last item of the day. The House had gotten all of its other agenda items done when its floor session recessed a little after noon. Republican leaders in the House went for continued discussions with Justice administration chief of staff Nick Casey.
The resumption of the floor session was delayed and then delayed again. About 5:30, Casey came out of a meeting with top Democrats, who then called for a caucus. Casey then walked over to speak with House GOP leadership.
The Republicans called their own caucus.
When the House floor session was resumed about 6, it didn’t take long. Majority Leader Daryl Cowles announced that Senate Bill 2933 would be laid over one day. But since it had to pass today or not at all, that meant not at all.
After the floor session, Armstead said that because the Senate’s tax reform bill had passed earlier in the day there was little reason to try to pass the House version through.
“I think it was better to develop what we’ve been working on and then work with the Senate to amend some of the provisions we’ve been working on into that bill,” said Armstead, R-Kanawha. “If they’ll accept it then that’ll be it, and if not then we’ll get into conference and work it out.”