CHARLESTON, W.Va. — The state Senate broke into a prolonged argument today about whether it’s time to stop considering income tax reductions up against a deadline to pass a budget for the coming fiscal year.
And then in the House of Delegates an argument broke out over whether it’s even worth it to extend a deadline for a conference committee working on the issue.
There was so much being debated behind the scenes that the conference committee, which was supposed to meet at 10 a.m., didn’t actually get together until 3 p.m.
The conference committee has been considering a proposal to reduce the personal income tax by an average 7 percent next year, followed by triggered reductions of 7 percent and 6 percent the following years.
But the plan calls for other taxes to be raised in response and to be sure a $4.35 billion proposed budget is balanced for the coming fiscal year.
Senate Minority Leader Roman Prezioso, who is serving on the conference committee, started debate on the Senate floor today by questioning the wisdom of the plan.
Prezioso called the income tax triggers a matter of “Russian roulette” — a guessing game that could result in major holes in coming fiscal years.
“Everybody’s afraid of eliminating the personal income tax,” Prezioso said. “That’s the problem we’re dealing with.
“This thing isn’t right. It’s not right. I’ve got so many trigger options right now that I’m getting gun shy.”
Prezioso was advocating for a proposal that would include a slight increase of the sales tax, maybe to about 6.25 percent, and the elimination of sales tax exemptions to some economic sectors such as telecommunications.
That proposal would forego the broader personal income tax reductions and probably forego Governor Justice’s plan for tiered severance taxes on coal.
“The personal income tax is a problem. That’s what we’re dealing with here,” said Prezioso, D-Marion, adding that he considers June 19 the drop-dead date to be able to process state payroll without a new budget in place.
“Let’s get beyond this thing. Let’s get out of this crisis. Let’s step back, take a deep breath, come back in and do a special session on the income tax.”
Republicans countered Prezioso’s remarks, with Majority Leader Ryan Ferns — also a member of the conference committee — saying his colleagues have a big stake in making sure the income tax cuts are thought out carefully.
“I just want to be real clear. Nobody in this building is as concerned about making a mistake on tax reform as we are,” Ferns said. “We own this thing. We are very concerned.”
Ferns noted that during the regular session the Senate passed a budget with significant cuts. That version was criticized for how deeply it cut and never made it through the House of Delegates.
Now, he said, the Senate Republicans are trying to balance the current budget without major cuts while also offering future breaks on the income tax.
There were so many disagreements about how to proceed that the conference committee meant to sort out matters was supposed to meet at 10, delayed until 10:30, delayed again to 11:30, delayed again until 1:30 and finally delayed to 3 p.m.
The Senate voted to suspend rules and extend the conference committee for a few more days. The House debated for a long time about the extension to Tuesday and then approved it 57-24.
On the Senate floor, Democrat Mike Romano stood and said “I think we’re kind of living in a fantasy world.”
Romano said the Legislature has made other significant tax cuts over the years, including the elimination of the food tax and the reduction of corporate net income taxes. But Romano objected to the current idea of cutting personal income taxes while the state is having budget problems.
“This is a bad idea,” said Romano, D-Harrison.
With the pressure of the new fiscal year starting July 1, Romano said the full Legislature could decide to do the income tax cuts, just to complete a deal. But he said it wouldn’t be a good decision.
“You do stupid things in a crisis,” Romano said.
Romano concluded by saying, “We’ve gone far enough. You’ve risked enough. It’s time to vote on a budget.”
More Senate Republicans stood up and countered those remarks. Senator Craig Blair, R-Berkeley, said, “Income tax reductions are the right thing to do.”
Senator Ed Gaunch, R-Kanawha, pushed back on criticisms of the income tax cuts.
“I’ll tell you who is being duped: Those people who say it’s a tax break for the rich,” Gaunch said.
All brackets get an income tax break in plan, but the criticism is that lower- and middle-class pay inequitably on the sales tax increases.
Gaunch focused specifically on the personal income tax component, though: “”Sure, the wealthy get a break but proportionally the lower brackets get more of a break.”
He said the personal income tax would send a message to state residents.
“I’ll tell you what the people of WV want. They want us to live within our means,” Gaunch said.
In the House of Delegates, debate broke out over whether to extend the work of the conference committee — or whether that would delay the inevitable defeat of a bill including the income tax reductions.
“If we want something to vote on, to be settled quickly, we should vote against this — correct?” asked Delegate Jim Butler, R-Mason.
Butler and some other Republicans were joined in their skepticism by some House Democrats.
“I’m going to vote no. Because in 10 days the state can’t make payroll,” said Delegate Isaac Sponaugle, D-Pendleton.
“We all know the votes aren’t here to do what the Senate wants to do. That’s not going to change over a 3-day holiday. The Senate Republicans are literally trying to shut the state down because they want tax reform.”
More delegates expressed frustration at a perceived lack of progress by the conference committee.
“Would you describe conference committee as deadlocked?” asked Delegate Andrew Robinson, D-Kanawha, noting that the conference committee had met three times without visible signs of progress.
Robinson was advocating for going ahead and voting as soon as possible on a bill that removes the personal income tax reductions from the equation.
House Finance Committee Chairman Eric Nelson, R-Kanawha, asked his fellow delegates for more time for the conference committee to work on a revenue structure.
“Just a little bit more time to put a bipartisan agreement together,” Nelson said.
Nelson later added, “Vote for this resolution. Give us a couple of days.”
House Minority Leader Tim Miley appeared to swing some votes when he stood and suggested the conference committee should be given more time out of respect for Nelson.
“I don’t like giving this extension because I think we’re delaying the inevitable,” Miley said. “Let’s give one small window of opportunity would be my request to you.”
However, Miley cautioned, “Be prepared for Plan B when we come back on Tuesday.”
He later stood again and clarified that he was asking for more time for the conference committee and hinted that he might very well vote against whatever plan comes out of the committee.
“I may not be voting for what the conference committee comes back with, but I want to make sure they come back with something,” Miley said.