CHARLESTON, W.Va. — House Speaker Tim Armstead says he wants to get a budget agreement before the start of the coming fiscal year. But Armstead can already envision circumstances under which that doesn’t happen.
“I want to get a budget. Our members want a budget. A lot of that depends on Jim Justice. I think he is holding the padclock to closing this government in his hands,” Armstead said today on “Talkline” with Hoppy Kercheval.
Almost exactly a month ago, Justice responded to a question and said he would be willing to risk a government shutdown if the alternative would be a budget he considers detrimental to the state’s progress. He later softened that statement, but here’s what he initially said:
“Let’s hope and pray that good judgment comes over all of us and we don’t need to do such a thing as that,” he said March 21, “but if that be that, so be it.
“Are you really willing to turn your backs on these people, and just cut them off, just throw them out in the cold and let them die? I’m not,” Justice said. “If it means we’ve got to shut down, we’ve just got to shut down.”
Armstead and the House majority have been critical of a budget proposal being touted by Justice over the past couple of weeks. And Armstead said today that as Republicans in the House have learned more their criticism has grown.
He said his caucus just doesn’t buy in to the plan Justice has been promoting.
“It doesn’t. I’m saying it doesn’t,” Armstead said on “Talkline” today. “I know people say ‘Those Republicans are just dug in; they ‘re not going to move.’ I think on this plan, that’s true. This is a bad plan.”
On the final night of the regular 60-day session, Justice announced a possible compromise between his administration and the Senate that would include the Senate majority’s desire to cut the state income tax with the governor’s tax and highway revenue proposals.
The House Republican leadership has reported little progress so far on talks. They object to aspects of the plan that would raise the state sales tax by a percentage as well as a corporate activities tax backed by Justice.
The Republicans in the House got together on a group telephone call Wednesday night, and Armstead said today that there was very little change in their position as a group.
“On the last night of session when all this unfolded, there was a great deal of concern about this, a lot of opposition to what the caucus knew about it, which was kind of sketchy because it all came out at the last minute,” Armstead said.
“All of our members have tried to learn exactly what’s in this proposal the governor has been working with the Senate on. I can tell you very loudly and clearly, I think the time they have taken to review it has made them even more concerned about it. They feel fired up about it. There’s so much to dislike about this plan.”
The proposal lowers the state income tax from five tiers to three with an eye toward eventually eliminating the income tax. To do so, it raises the state sales tax from 6 percent to 7 percent.
House leadership had considered its own tax reform plan that, in its final form, kept the income tax the same but lowered the sales tax. It also eliminated exemptions for certain sectors of the economy.
“We’ve been very active and supportive with a broaden-the-base and lower-the-rate plan, but this is just broaden-the-base and raise-the-rate,” Armstead said.
The proposal Justice has been touting includes funding for his highways package, coming from an increase to the gasoline tax and DMV fees. It also includes a corporate activities tax that Justice says would be a way for businesses to increase their help of the state’s fiscal situation.
“The gas tax, the DMV fee being doubled, the CAT tax – all these things have given various members of our caucus concern, and they feel the people of West Virginia can’t afford to take on the tax burden this would impose on them,” Armstead said.
Armstead is advocating the use of a budget that passed both houses of the Legislature as a starting point.
The budget that was passed by the House and Senate on the final night of the legislative session draws about $90 million from the Rainy Day Fund and also reduces funding for higher education and for the medical services line item for the Department of Health and Human Resources.
That’s the one that Justice vetoed and, in doing so, used bovine fecal matter to illustrate his position.
“We are ready and willing to sit down at the table and try to work out a reasonable agreement,” Armstead said. “We should be starting with the budget that we passed and the things he has concerns about, let’s talk about those.
“We passed a responsible budget; he doesn’t like that budget, he vetoed it, he belittled it.”
Justice has been having conversations over the past week with interested parties, including Armstead, Senate President Mitch Carmichael and House Democrats.
Armstead said if the substance of those conversations doesn’t change, the road will lead nowhere.
“He can continue on this course and spend the days we have between now and July 1 and go down what I’d consider going down a rabbit trail or he can get everyone in a room and talk it out,” Armstead said.
Justice met Wednesday afternoon with Democrats in the House. House Minority Leader Tim Miley said it was a productive discussion, especially to hear Justice’s position in his own words.
“I think for the first time the governor had a chance to share his plan for a path towards prosperity in terms of job creation and infrastructure development with a good portion of our caucus,” Miley, D-Harrison, said after a two-hour, closed-door session between about half of the House Democrats and Justice.
Miley has stated concerns about the income tax proposal advocated by the Senate Republicans. His worry has been that the proposal would place increased burden on lower-income taxpayers while also reducing state revenue in coming years.
“I did have a concern about what effect reducing the income tax will have on low-wage earners as well as the budget as a whole,” Miley said after Wednesday’s meeting. “I was concerned it would leave a hole in the budget.
“But the governor indicated the budget holes would be backfilled by the economic activity that’s created by a lot of the jobs that will be created if the road bonds pass. So if you’re putting anywhere from 25,000 to 48,000 people to work then the economic impact of the income tax derived from that activity will backfill a lot of the holes that might otherwise occur.”