CHARLESTON, W.Va. — State budget negotiations hit a snag over numbers late Thursday afternoon.
Leaders in the House of Delegates objected to a proposal to raise the consumer sales tax from 6 percent to 6.85 percent.
The 6.85 sales tax rate was considered necessary by financial analysts to prevent future holes in the budget if the leaders wind up approving a reduction and then phase-out of the personal income tax.
Earlier Wednesday and Thursday, all sides were discussing a possible sales tax rate of 6.5 percent as a way to balance the budget while also lowering the personal income tax.
The proposal and objection over the 6.85 rate came out of a late-afternoon meeting between House, Senate and Justice administration leaders. No additional meetings are currently scheduled.
On Thursday morning, the top leaders of the state Legislature said they were getting closer on a budget deal, but they stopped short of guaranteeing an agreement will be ready for the continuation of a special session on Monday.
“We’re coming back Monday. We hope to have an agreement,” Senate President Mitch Carmichael said this morning on MetroNews’ “Talkline.”
House Speaker Tim Armstead, also appearing on “Talkline,” also described incremental progress on a potential agreement.
“Are we right on the verge of an agreement? I wouldn’t say that,” Armstead told host Hoppy Kercheval. “We’ve still got some work to do.”
Armstead went on to say, “I would like to see that (agreement by Monday) occur. I think we’re closer to that than we have been.”
During recent discussions between House and Senate leaders and Gov. Jim Justice, negotiators have been focusing on finding a balance between lowering the personal income tax and raising the state sales tax.
Some discussions have scaled back the income tax reduction from an average 20 percent decrease starting next Jan. 1 to reducing the tax by an average 20 percent over a three-year period.
Doing so could allow for a lower increase of the sales tax. Initial proposals called for an increase from the current 6 percent to 7 percent. Other recent negotiations had put that number at 6.25 or 6.5 percent instead.
“The Senate is very much dedicated to wanting to reduce the income tax. The big concern is what do you do to get there?” Armstead said.
House Speaker @ArmsteadWV updates @HoppyKercheval on where things are this week with the budget. WATCH: https://t.co/wkudfIAoe1 pic.twitter.com/UNyMaGP2oR
— MetroNews (@WVMetroNews) May 11, 2017
Carmichael said he would prefer to “focus the discussion on whether it’s more advantageous to raise the sales tax by 1 percent and lower the income tax by 20 percent.”
But Carmichael acknowledged it’s been a challenge to get everyone to agree to the particulars.
“As you start moving taxes around to approve jobs, growth and opportunity, people are affected by that.”
He added, “It’s like a Rubik’s Cube.”
.@SenCarmichaelWV joins @HoppyKercheval on Talkine to discuss the push to lower the state income tax. WATCH: https://t.co/wkudfIAoe1 pic.twitter.com/NXSCnPS9uW
— MetroNews (@WVMetroNews) May 11, 2017
During his “Talkline” appearance, Armstead alluded to the need to brief his caucus on the proposals. A telephone caucus was set for this evening among Republican delegates.
On Wednesday, the delegates involved in discussions included Armstead, House Majority Leader Daryl Cowles, House Finance Chairman Eric Nelson and Delegate Eric Householder, the assistant finance chairman.
Those negotiating in the Senate included Carmichael, Senator Robert Karnes, who led the Senate’s Select Committee on Tax Reform and Senator Craig Blair. Senate Finance Chairman Mike Hall has been involved in discussions too, but had another obligation Wednesday.
Gov. Jim Justice attended a meeting involving all parties on Wednesday.
“We’re talking, and I think that’s a positive step,” Armstead said.
The leaders are also discussing the best way to approach investment in West Virginia’s highways and bridges.
Governor Justice has advocated for legislative passage of a bill raising fuel taxes and fees at the Division of Motor Vehicles. The Senate passed that bill during the regular session, although it was voted down in the House.
“What the governor has proposed is the most aggressive, ambitious road building project in many years,” Carmichael said today.
The Republican majority in the House favors a statewide bond vote on highways funding prior to approval of additional taxes. The House and Senate both passed a bill allowing for a statewide vote on a highways bond during the regular session.
“I support the (road) bond. I think it’s the right way to go,” Armstead said. “The bond had to be passed with two-thirds of the Legislature, and it did so. So that’s a sign of its support.
“If the governor is concerned we’re going to fight the bond, I don’t see that happening.”