CHARLESTON, W.Va. — With bipartisan support, the House Finance Committee voted in favor of a revenue bill that keeps the state sales tax as-is and opts out of reductions in the personal income tax.
That differs from a bill that passed the state Senate earlier this week raising the sales tax to 6.95 percent and reducing the personal income tax by an average of 20 percent over 2 years aiming to eliminate it over time.
Technically, the committee passed a committee substitute for what the governor introduced, rather than amending the Senate’s passed version of the “Tax Reform Act of 2017.”
The bill, along with some changes the committee made, was read for the first time by the full House of Delegates on Thursday afternoon. It could be up for passage on Friday.
There was not immediately a fiscal impact estimate for what House Finance Committee passed. Financial experts on hand suggested the bill will partially bridge the state’s revenue gap with some cuts still being necessary.
“It’s still somewhat short of filling the gap, but it could save from drastic cuts,” said House Majority Leader Daryl Cowles, R-Morgan. “The bill improves our tax code and accomplishes several longstanding policy changes.”
Those familiar with the bill — and the changes that occurred in committee — described it as closing about $100 million of the state’s budget gap, maybe a little more.
“I’m delighted with some of the policy changes in the bill but I don’t think it comes close to producing the revenue we need,” said Delegate Larry Rowe, D-Kanawha.
Delegate Cindy Frich, R-Monongalia, commented: “I’ll be voting for the bill but I hope we get some new fiscal information because the numbers changed significantly.”
The governor has not yet introduced an actual budget bill, so lawmakers have said they’re working somewhat without knowing the specifics of the end goal.
The revenue bill passed out of committee has income tax exemptions for veterans’ retirement and on Social Security income. The latter is a move that Democrats in the Senate tried to amend into that house’s version of the bill this week.
Delegates made more changes to the bill in committee. They removed a restructuring of severance taxes on coal, which had been supported by Gov. Jim Justice.
Reversing the proposed restructuring would actually provide more revenue for the coming year’s state budget. The amendment was sponsored by Delegates Daryl Cowles and Isaac Sponaugle, a Republican and a Democrat, who said the state can’t afford tax breaks for coal right now.
Delegates also removed several direct-use taxes originally in the bill and meant to “broaden the base.” The suggested taxes that were removed applied to transportation and digital purchases.
What remained included new taxes to telecommunications, communications, contracting services up to $40,000, electronic data processing, health and fitness services and primary opinion research.
Delegates had received criticism from the governor and from their colleagues in the Senate for a lack of action on the revenue bill during the special session, now on Day 6.
Delegates of both parties generally expressed satisfaction about the bill that passed.
“This is one of the best days I’ve ever had on Finance,” said Delegate Linda Longstreth, D- Marion.
Sponaugle commented, “I too would support this bill. I will be voting in favor of this.”