CHARLESTON, W.Va. — What will happen in a special legislative session called by Gov. Jim Justice?
Yeah, good question.
We know Justice has called the Legislature in starting Thursday to try to reach some agreement on the state budget. He vetoed — with a much-discussed flourish — a budget that borrowed $90 million from the state Rainy Day Fund and cut funding for higher education and healthcare.
We know the Justice administration has been working on a possible budget deal with the state Senate. It would incorporate the Senate majority’s desire to cut the personal income tax with the governor’s tax increase proposals and highways funding plan.
But the House majority has objected to a variety of aspects of that plan.
So here’s where that leaves us:
Discussions are continuing, but no deal is certain
House and Senate leadership, along with Justice and administration representatives, met for about an hour Tuesday morning. The meeting continued after that without the governor himself present.
That was a breakthrough in itself because House Speaker Tim Armstead said it had been about 15 days since he’d had discussions with the governor or the administration.
“We haven’t reached an agreement. We had a discussion for the first time in a couple of weeks with the governor today,” Armstead said Tuesday afternoon. “I and other members of our leadership team and staff were in a discussion with the governor and met after that with Nick Casey and some of the tax people just to talk numbers.”
Armstead continued, “I don’t know that we reached any type of common ground or agreement but at least we are re-engaging with the discussion and looking at different options and trying to find some ways to satisfy the House, the Senate and the governor. Whether we can get there by Thursday I still believe is a very heavy lift.”
How far apart are they, anyway?
Significant progress actually has been made already on cutting into the budget shortfall that the Justice administration initially pegged at 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 budget gap originally described.
Well then, what are the issues?
Oh, there’s a lot of them.
One of the key concerns for Armstead and his Republican caucus is part of the plan that would raise the consumer sales tax from 6 percent to 7 percent. Delegates on border counties believe that will make local businesses less competitive. Others say the tax will unfairly hit lower-wage consumers.
“Again, we’re trying to express to them the concern that our members have particularly with increasing the sales tax to 7 percent,” Armstead said.
Another hangup has been Justice’s insistence on a tax to bring business to the table. At first that was a gross receipts tax. Then it became a proposal to raise the corporate net income tax from its current 6.5 percent to 8.5 percent — a figure that has now been negotiated to 7.5 percent.
And negotiations have been ongoing with the coal industry over a sliding tier system for severance taxes.
What could go wrong?
Senate leadership has been negotiating with the governor for a couple of weeks, and both sides have acted optimistic about a deal.
But the House majority has serious reservations about the aspects of the plan mentioned above.
“I still believe the governor’s proposal he’s worked out with the Senate will not pass the House,” Armstead said Tuesday. “We just want to be ready to move forward when and if that takes place that we have an alternative proposal that we can move forward with.”
What’s he mean — alternative proposal?
Yeah, another good question.
One possibility is if the plan hatched between the Senate and the governor goes down, then a compromise between the Senate and the House could arise.
One scenario would be a plan to raise and broaden the state sales tax a few months before the income tax is reduced, providing a financial cushion for the coming fiscal year.
Under the scenario of a House-Senate agreement, the governor could lose out on the tax increases he has backed, including additional tax hikes on businesses and, possibly, increased fuel taxes and DMV fees meant to improve state roads.
“That’s something I think the majority of members of the Legislature could get on board with,” Senate Majority Leader Ryan Ferns said earlier this week. “It would put the governor in a challenging position in that it doesn’t have what he felt were draconian cuts. It would have the majority of the cuts restored.”
Isn’t it possible that enough rank-and-file Republicans unite with Democrats to pass a budget in the House?
I’m sorry but that doesn’t seem very likely.
How will we see all this unfold?
In most ways, the special session that starts Thursday will be structured like a regular session of the Legislature.
Both houses will gavel to order sometime Thursday, probably at midday, and the governor’s bills will be introduced.
There won’t just be one big budget bill. Instead, there will be one or more revenue bills that represent aspects of whatever the revenue strategy winds up being.
Most guesses seem to be on those bills being introduced first in the Senate because that’s where the governor’s negotiations have been focused. It’s possible that if there’s solid support in the Senate, the bills could pass through swiftly.
So it gets interesting in the House, right?
Even Armstead wasn’t yet sure what to expect.
“We haven’t seen the governor’s call yet, so we don’t’ know what issues would be on it or how it would be drafted in terms of legislation he might introduce. We don’t know if he would introduce bills in the House and the Senate. So a lot of that remains to be seen,” Armstead said Tuesday afternoon.
“Once we get a better picture of what’s on the governor’s call and the actual content of those bills then I think we’ll be in a better position to discuss strategy with our members.”
In concept, it’s possible that a lawmaker could make a motion to vote down a bill or bills on first reading. That doesn’t seem like proper etiquette.
Where matters could get interesting is second reading, amendment stage.
“That’s where the key is going to be, is what happens on second reading,” House Majority Leader Daryl Cowles said last week. “Do we try to fix it so it’s acceptable to the House or do we give it a thumbs down and send it back to them?”
“It’s probably easier to sit down and come to some sort of framework agreement between the House and Senate and governor, but absent that it looks like we’re going to pass the bill back and forth until we reach some sort of conclusion. It’s certainly not the preferable way to go, I don’t think.”
What happens if the session is inconclusive or just stalls out?
Legislative leaders of both parties say they wish a general agreement had been reached before all 134 members of the Legislature were called back to the Capitol.
Senate President Mitch Carmichael told Joe Stevens of WMOV Radio that legislators should be able to assess in short order whether the budget package is going anywhere.
“It would obviously be much better if the governor, the Senate and the House of Delegates had all agreed to all components of this plan. The governor wanted to get this done much quicker than probably we’re ready,” Carmichael said Monday morning.
“It’s not quite baked and it could spin out of control on Thursday and not have agreements. If that happens, we’ll manage that. We’ll just say ‘OK, we’re not getting this done we’re not going to waste any taxpayer money; let’s come back later and agree.'”
Carmichael did say there’s some merit to having a time factor, though.
“I think it creates some pressure the fact that we’re here, to get it done. Hopefully it’ll work out. If not we’ll just have to regroup and come back later.”
Say what? Come back later?
The pressure will be on to come up with some budget agreement before the new fiscal year begins July 1.
If the Legislature recesses from the special session without a budget in place, the governor could call lawmakers back. The alternative is, the Legislature could call itself back, although that would require a three-fifths majority vote. That actually would give the Legislature more latitude to introduce its own bills to be the components of a broader budget bill.
Ferns described a middle ground scenario that might work out like this:
“We immediately call ourselves into session and pass all the bills we need to pass. Thursday, Friday, Saturday – we could remain in session and our members could go home for a week. We wouldn’t be tallying up the cost because if our members don’t show up they don’t get paid.
“Minimize the cost and wait until the governor vetoes and then we could all come back and potentially vote to override the veto.”
Please stop threatening us.