CHARLESTON, W.Va. — Gov. Jim Justice has called a press conference today in his “war room” to discuss the state budget while his staff, the Republican majority in the House of Delegates and Democrats continue to hash out their positions.
The various sides of the budget talks described inching closer to an agreement on Wednesday but not quite getting there.
All the sides seem to agree that additional revenue needs to be a big component in closing the estimated half-billion-dollar budget gap for the coming fiscal year, but the way that takes shape is still under debate.
House Minority Leader Tim Miley said Democrats were presented with some new budget possibilities Wednesday afternoon, right before a tax plan at the heart of the discussions was to be voted up or down in the House.
The latest twist came too late for a fully-considered decision, Miley said. And because the Senate had already passed a tax reform plan that can be amended over the next few days, the House elected table its own tax reform proposal without a vote.
“I think there are negotiations ongoing to try to craft a budget,” said Miley, D-Harrison. “Some issues and suggestions and possibilities came up at the last minute with not a lot of time to really fully evaluate and vet in terms of certain exemptions that the majority party wants to eliminate.
“I think talks are still ongoing. It’s just hard to make snap decisions when things are brought up at the 11th hour.”
The tax reform bill that was being considered is described by Republicans as broadening the base. It eliminates exemptions for some personal and professional services. Miley said it was that area of the bill where a new discussion flared up.
He said the focus was on “direct-use” exemptions for businesses in transportation and communications. But what he heard was not well enough defined.
“I don’t know what that means,” Miley said. “How’s communications defined? How’s transportation defined?”
Miley and the Democrats are still skeptical of the removal of exemptions that is a key aspect of the Republican proposal.
“Whenever you’re talking about eliminating sales tax exemptions, that means you’re going to impose sales taxes on certain activities that aren’t otherwise taxed,” Miley said.
“All that does is increase the cost of doing business, which is passed on to the consumer. So some of the exemptions they sought to have eliminated they characterized as the business community’s investment in this process.”
Miley said the Republican talk about removing exemptions amounts to raising taxes without calling it that.
“I think there’s going to be an effort to raise those revenues by eliminating tax exemptions so that some can leave here saying they didn’t raise taxes when in fact there are taxes being paid by people that are sort of hidden below the radar,” Miley said.
House Speaker Tim Armstead said the Republican caucus feels strongly that any additional revenue that comes in needs to be within the framework of tax reform.
“Not just placing additional tax on the people of our state but looking at ways to reform our tax structure to make it more conducive to job creation, to be more fair — and in a way that we may have to stagger it in some ways to move through this budget year — but ultimately to be revenue-neutral so that we are not raising taxes on the people of West Virginia,” Armstead said.
Armstead said Republicans in the House have made progress in discussions with the governor and his staff this week.
“I think we’ve had productive discussions with them, and we’ve come back with some proposals. We’ve thought that there’s a great deal of interest in some of those proposals and in others there wasn’t,” Armstead said.
“So this is a multifaceted issue. There are moving pieces to it. In some of those we’re in agreement with the governor. In some we’re not. So we’re going to continue those discussions.”
Justice and his staff have said repeatedly that the state’s solution to its budget woes needs to involve all segments of society. Justice is particularly concerned with making sure businesses and the wealthy take part.
“A lot of the high-income people in WV want to participate, and the governor wants them to participate,” the governor’s chief of staff, Nick Casey, said Wednesday on MetroNews’ “Talkline.”
Armstead said a lot of progress has been made in the past week to develop a mutual understanding between the House majority leadership and the Justice administration.
“I am still hopeful,” said Armstead, R-Kanawha.
“I still believe we can move in the direction of long-term tax reform by broadening our tax base and lowering the rates — which has been our goal for several years and what I believe the legislation moving forward would accomplish.
“I think there has been some support for that shown by the governor and his staff and we’re going to continue to build on that and hopefully take it across the finish line.”
Miley isn’t wild about the Republican blend of tax reform, but he said he is glad the pace of the budget conversations has picked up.
“There seemed to be resistance to at least talking about revenue measures. Now I think we’re there, I hope,” Miley said.
“These conversations should have occurred, in my opinion, long before now. That’s OK. I think people expect us to work hard these last 10 days and get the job done.”