Balancing act is necessary for state budget, Charleston chamber says

CHARLESTON, W.Va. — The Charleston Regional Chamber of Commerce, which has more than 600 member organizations, says a legislative budget that borrows from the Rainy Day Fund and cuts higher education would be bad for the state’s business climate.

But the organization also doesn’t favor a commercial activities tax touted by Gov. Jim Justice as a way for businesses to take part in fixing the state’s fiscal woes. Instead, the chairman of the organization suggests raising the corporate income tax would be more appropriate.

The Regional Chamber put out a statement late last week calling upon the legislative and executive branches to work together on long-term budget solutions.

“The Charleston Chamber supports reasonable and fair, new or increased taxes that will help us fully fund the priorities of this great State, including education, roads and maintaining the highest bond and credit rating possible lest we all suffer larger financial consequences in the long term,” the Chamber wrote.

Steve Hedric

Coming up with a state budget most people can live with probably depends on blending the goals of Gov. Jim Justice and legislative leaders, said Steve Hedric, the chairman of the regional chamber and president of the Mid-Atlantic Technology, Research & Innovation Center

“There’s a balancing act between the Legislature and the executive branch that still has to be achieved,” Hedric said in a telephone interview Monday afternoon.

Hedric added, “The long view has to be taken by the governor and by the Senate president and by the speaker and members of the legislative body. I think businesses are going to embrace what must be done. Take the long view is what we would encourage them to do.”

Gov. Jim Justice’s administration has been directly involved in talks with Senate President Mitch Carmichael about a budget that blends ideas from both.

That budget package would step down the state income tax, as desired by the Republican majority in the Senate. But it keeps elements of Justice’s proposals such as increased gas taxes and DMV fees for infrastructure projects, plus an increased state sales tax.

That package, so far, has included a corporate activities tax that Justice backs as a way to ensure business plays a part in solving the state’s fiscal problems. Republicans in both houses say the tax is anti-business.

Two weeks ago, Justice vetoed a budget bill passed by both houses of the Legislature.

That budget would have relied on $90 million from the Rainy Day Fund. It also would have cut $140 million to the medical services line in DHHR. And higher education would have taken a cut of just under $30 million.

The regional chamber is wary of filling the state’s fiscal gap by using the Rainy Day Fund. The worry is that bond rating agencies will downgrade West Virginia again, limiting its borrowing power for infrastructure projects.

“We would perceive that spending the Rainy Day fund is the wrong answer,” Hedric said. “Another downgrade of our bond rating is something we should not do. Fundamentally we consider that to be a bad path.”

Hedric also expressed concern over potential cuts to higher education.

“We also have seen that there have been proposed cuts to higher education that we consider to be disadvantageous to the state over the long haul.”

Hedric endorsed the governor’s desire to spend more on the state’s roads and bridges.

“We do appreciate what the governor has had to say about the state roads and infrastructure. We recognize how important that infrastructure is.”

The Charleston Regional Chamber recognizes that tax increases will have to be a part of the package, Hedric said. He urged state leaders to continue weeding out inefficiencies in state government but said business leaders are generally willing to accept higher taxes, given the situation.

“We recognize that some level of logical tax increases will have to occur within the state,” Hedric said. “Our elected officials will utilize their wisdom to deliver an appropriate revenue increase and determine where it will have to come from.”

The chamber does have concerns, though, about the commercial activities tax advocated by Justice. It’s a gross receipts tax, meaning it would be imposed without regard to revenue.

“The regional chamber has general support for what we perceive to be the Senate President’s position that the so-called CAT tax is not the appropriate path to take,” Hedric said.

The state Chamber of Commerce a few weeks ago publicly expressed its willingness to accept a commercial activities tax.

“The least painful thing we can do is a temporary commercial activities tax that will sunset,”state Chamber of Commerce President Steve Roberts said then. “We believe businesses realize it’s a significant contribution and appropriate one.”

Hedric said business leaders would continue to listen to what the governor says about the corporate activities tax, but he suggested an increase in the corporate net income tax might be more appropriate.

“Corporate net income tax might be the fairest because it’s based on ability to pay rather than just that you’re here. It’s also not a pyramiding tax.”

He added, “That’s on balance with what I said a moment ago. We recognize revenues have to be increased, but we’re concerned about something like a CAT tax.”

Jim Justice

Asked about budget possibilities in a brief interview Monday evening, Gov. Jim Justice described the proposed commercial activities tax of .045 percent as a burden most businesses could bear.

“The thing about the CAT tax, from a business standpoint, it’s almost insignificant,” Justice said.

“If you have a business that has a gross income of a hundred thousand dollars a year, the CAT tax is 45 bucks. For crying out loud, it’s almost next to nothing compared to what we’re hopeful is going to happen to bring business into our state and opportunities into our state.”

Justice added that he’s flexible but he does want businesses to participate.

“It doesn’t necessarily have to be a CAT tax but it’s got to be some participation from the businesses,” the governor said.

Hedric said the overriding position of the Charleston Regional Chamber of Commerce was produced during a series of meetings among its top leaders.

“This came together over multiple meetings and dialogues over the Charleston Regional Chamber of Commerce board of directors and staff,” Hedric said. “The board is aligned with regards to these statements.”

Reporter Alex Thomas contributed to this story.





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