CHARLESTON, W.Va. — As the Legislature prepares for a special session to consider balancing the state budget, raising the sales tax, lowering the personal income tax, raising the corporate net income tax, tiering severance taxes and raising fuel taxes, there’s another point of view emerging.
Call it Team Simplicity.
These are lawmakers who are coming to believe that given the time available and the divergent points of view, the to-do list is too much.
These legislators would like to narrow their focus to fixing the state budget before the new fiscal year begins July 1.
That means battles over agenda items like tax reform or highways funding would need to be fought another day.
“We have a structural imbalance and I think we’re not that far apart. Let’s keep it simple. We need to stay KISS principal,” House Finance Chairman Eric Nelson said in a telephone interview.
Significant progress actually has been made already on cutting into the projected budget shortfall of about a half-billion dollars.
The Legislature agreed to some measures like foregoing the governor’s Save Our State fund, smoothing out payments to the teachers retirement fund and redirecting workers comp debt funding back to the general fund.
Legislators also agreed to continue the 2 percent cuts to state agencies that started under then-Gov. Earl Ray Tomblin. Lawmakers are willing to forego a 2 percent average payraise to teachers, although the governor might not be. And there’s general agreement to end a transfer from general revenue to Highways.
Add all that up, and the fiscal gap remains somewhere around $200 million. That’s within striking distance compared to the half-billion dollar budget gap originally estimated.
And resolving the gap would be even more achievable if revenue estimates start looking up, as some Capitol chatter indicates.
Gov. Jim Justice, who announced plans to call lawmakers back to Charleston this Thursday, wants a balanced budget but also funding for a major state infrastructure package, plus funding for a teacher payraise. Republican leaders in the state Senate want cuts to the state income tax.
“I think we’re on a pathway to pass a budget that is special,” Justice said when announcing the special session.
The governor went on to say, “I don’t see how in the world any legislator can walk away from this opportunity. The vote needs to be 34-0 and 100-0 and signed by me. This is the opportunity of a lifetime in the most dire situation.”
Easier said than done, Nelson said.
“The more difficult things are, the less chance of getting a vote,” said Nelson, R-Kanawha.
What’s put before legislators this week won’t just be a budget bill. The first step will be one or more bills outlining components like the sales tax increase or severance tax changes.
“Before we can do the budget we’ve got to pass certain bills. All we’ve heard is having one bill that has all these components to it. I’m quite concerned that doesn’t have a chance in the House,” Nelson said.
“If he’s talking about gas taxes, there’s a core group that will be completely against that.”
His counterpart in the Senate, Finance Chairman Mike Hall, is also advocating for a solution to the budget problem now, buying time to build consensus on the other issues down the road.
“I’d like to take a step back and say what is it we’re trying to protect here?” Hall said. “What are people’s underlying philosophies about government and funding of government. What are we doing?”
Hall went on to say, “Maybe the simplest solution is raise the revenue for one year and spend the next year starting talking seriously about the level of government we want to fund.”
Hall notes that Governor Justice is only a few months into his job with agency heads who are also skilled but new to their roles. He thinks the Justice administration would benefit from a year to determine governmental priorities.
“I think he needs a year to sort of get in his mind exactly what we ought to do about certain things, rather than react. We could spend a year with him getting his sea legs under him,” Hall, R-Putnam, said in a telephone interview.
Hall said of the governor, “He has three whiteboards worth of things he doesn’t want to have cut. How does he know? He’s been there for one or two months.”
He noted that significant numbers of legislators were first elected in either 2014 or 2016. He said those legislators also might need more time to determine priorities.
“We have a new governor and new legislators trying to solve problems that are very old,” Hall said.
He added, “We have to decide where we think people are and where we need to be. Let these new leaders come to own it. I don’t think 60 days for a lot of these new people was enough time, particularly with everything else.”
Senate Minority Leader Roman Prezioso, a former Finance Committee chairman, said the particulars of the budget package to be under consideration this week could prove to be its undoing.
For example, Prezioso said, leaders in the coal industry and the Justice administration were still trying to work out an agreement on severance tax rates in the budget deal.
In some cases, as Prezioso described it, individual lawmakers have looked at the overview of the budget package and found it acceptable. But as lawmakers have looked more closely at specific aspects of the deal, they’ve found cause to object.
“The longer you drag this out, the more the people have the opportunity to look at the issues, the more they have the tendency to say ‘Whoa, I can’t support this.'”
Prezioso said the governor’s enthusiasm sells the big picture of the proposal, but then lawmakers hear from constituents expressing concerns about one aspect or another.
“He fires you up. But then when we walk out we hear from constituent groups saying, ‘Hey we’d better slow this thing down.’ The longer it goes the harder it’s going to get,” said Prezioso, D-Marion.
One the other hand, Prezioso cautioned, it could be short-sighted to abandon this moment that could provide a long-term fix to the budget or to boost the state’s economy.
“Do you piecemeal it together? Are you just trying to get a budget so you kick the can down the road and come back next year? But you’ll be in an election year which further complicates things. If you’re going to fix it, it seems like this would be the year when it’s a nonelection year.
“The governor’s saying ‘Look, we’ve got to take bold steps now to try to fix the big picture’ instead of saying ‘Here we go again.'”
Justice said the budget package that will be under consideration this week will include “modest additional cuts” but will largely avoid the cuts present in an earlier budget passed by the Legislature.
“If we can pull that off, just think about it. We’ll be able to do that without cutting into higher ed, without cuts to DHHR, without cutting into K-12,” Justice said.
“How good could that possibly be? If you could vote no to this, what are you voting yes to?”
Appearing last week on “Talkline,” House Speaker Tim Armstead said he believes the budget package is starting to come apart under its own weight.
“You put this many things together, people think this brings people on board,” said Armstead, R-Kanawha. “I think they’re losing people on this plan because as they begin to learn the impact of the severance tax on coal jobs in our state there are a number of people concerned about that.
“The 7 percent sales tax and the CAT tax, people are beginning to have concerns about it. In the Democratic party, I think they’re having concerns about what the income tax would mean as it impacts certain wage earners.”
Armstead went on to say, “I can’t say whether they have lost support for it, but there are a number of people expressing concerns about some aspects of it. As the discussions have gone along, I don’t think they have built support. I think they’ve lost support.”
House Majority Leader Daryl Cowles suggested last week that a simpler path might be a more effective path. Focusing on the budget gap is an easier fix than the other issues coming with it, Cowles said.
“Since that’s our problem why don’t we simplify things and try to solve that. Let’s set aside tax reform, let’s set aside new programs and try to solve the budget gap,” Cowles, R-Morgan, said in a telephone interview. “That’s simplifying the issue before us.”
Delegate Eric Householder, the vice-chairman of the Finance Committee, is in favor of continued talks about changing the state tax code, but he says that issue could be separate from the budget discussions.
“They are two separate issues. I think we can work on both of them at the same time but they do have to be separated,” said Householder, R-Berkeley.
Householder said he would like to continue focusing on a budget that limits spending.
“There are many serious-minded legislators who have an interest in fixing this long-term budget imbalance,” Householder said. “Most of us believe that no matter what we choose to do, we’re going to make decisions that will be unpopular with somebody somewhere.”
Consensus also has not been easy to reach on cuts.
Some specific cuts proposed by legislators during the session died along the way. A bill to eliminate film office tax credits died on the House floor. A bill to do away with the racetrack modernization fund passed the House but died in the Senate. A bill to eliminate the state’s role in greyhound racing was vetoed by the governor.
Some of the governor’s initial proposals for cuts were reversed. The governor initially proposed cutting the Educational Broadcasting Authority but a few weeks later changed his mind. Proposed cuts to the Division of Culture and History also were reversed.
“We need a list of specific assurances from him for cutting and controlling expenditures in the budget,” Householder said. “It’s up to us to get the governor on board and I don’t know if we’ll be able to do that.”
House leaders say the Justice administration hasn’t been talking with them about the budget in recent weeks, though. Nelson said that needs to change quickly, with the budget session approaching.
“Now more than ever is when we need a true leader to step up and lead,” Nelson said. “A true leader would bring everybody to the negotiating table right there and hammer out the important aspects we need to get done and agree to and move forward before we waste a lot of precious time and money calling us in without a done deal.”