CHARLESTON, W.Va. — One week out from what some legislative leaders are calling the drop-dead date to come up with a budget plan and continue to make state payroll prior to the new fiscal year, today could be a turning point at the state Legislature.
Here’s what’s on the agenda:
- A contentious aspect of a key revenue bill — the reduction of personal income taxes — will either move forward today or be abandoned, Senate Majority Leader Ryan Ferns said this past Friday afternoon.
- Gov. Jim Justice is meeting at high noon with Democrats from both houses, a possible final attempt to try to persuade them that the income tax reductions are a good idea.
- A conference committee set up to work out disagreements over the revenue bill, especially the income tax aspect, is up against a Tuesday deadline to reach consensus.
- If the conference committee fails, a possible fallback plan is a revenue bill originally passed by the Senate that’s been back-pocketed in House Finance. There’s some talk that the bill could be subject to a strike-and-insert amendment as soon as this afternoon.
At the center of much of that will be House Finance Chairman Eric Nelson, who is one of the chairmen of the conference committee.
Conference committee co-chair @ericnelsonjr emphasizes the critical need to pass a budget to @HoppyKercheval. WATCH: https://t.co/wkudfIAoe1 pic.twitter.com/U6GxeWF7Gc
— MetroNews (@WVMetroNews) June 12, 2017
“My plan this week starts with the conference report, and if that doesn’t work we’ll look at a revenue bill. The budget bill will be right on its heels followed by the two road bills,” Nelson, R-Kanawha, said in a Sunday evening telephone interview.
“We’ve got to put to rest the idea that government is going to shut down. Everyone is posturing to get the best deal for their constituents. We will make sure a products gets out there that funds government right away.”
Nelson said the Legislature needs to move forward with a budget plan to put state employees at ease and to halt the impression of dysfunction that is likely to be shaping the way potential investors from outside the state perceive West Virginia government.
“I hear from more agencies right now, or heads of agencies, of what their employees are doing or not doing or talking about,” Nelson said.
“Lastly, how do you think the outside world is looking at us right now. We want to push being pro-business, and doggone it the outside world wants some certainty.”
Nelson believes the personal income tax cuts that have been supported by Senate Republicans and the governor but eyed warily by other groups at the Capitol are on their last legs.
“The likelihood of any passage of a personal income tax reform at this stage with the proper triggers in place is less likely,” Nelson said.
“From what I have seen and heard and saw Friday, that opposition has probably grown to its highest point yet. That opposition within the Republican House caucus has also grown.”
Speaking on Friday afternoon to the Wheeling News-Register, Senate Majority Leader Ryan Ferns said if a deal including the income tax reductions isn’t broadly acceptable by Monday then it will have to be abandoned.
“On Monday, we’ll get a sense of what support there is and know if we’re going to do tax reform at all,” Ferns, R-Ohio, told the newspaper.
“If we can compromise on triggers — and bring back legislation that will get support — we’ll know Monday. If we can’t get it, we’ll abandon all attempts at tax reform.”
That’s a key issue on whether the conference committee is able to submit a report on the revenue bill.
The committee needs a majority of the appointees from each house to pass its report, which is due by Tuesday.
If the income tax reductions are to be pulled out then at least one of the Senate Republicans on the conference committee — Ferns or senators Craig Blair and Ed Gaunch — would have to be swayed to do so. Otherwise, the conference committee could wind up in a deadlock.
If the conference committee were to pass its report, it would go to a simple up or down vote in each house.
From there, obviously, it would need majority votes in both the House and Senate — which is another calculation that has been taking place behind the scenes.
“There’s always a lot of work behind the scenes,” Nelson said. “The name of the game with anything you do is you’ve got to have the votes to pass it. We’re thinking about this. We’re thinking about that. Where are the votes?”
If the conference committee is unable to agree on a path forward, then another option is going through House Finance, where a revenue bill that originally passed the Senate has been parked for a few weeks.
A strike-and-insert amendment could be offered for the Senate revenue bill, providing a new route.
There would certainly be key differences between a strike-and-insert bill and what the Legislature has been considering the past couple of weeks.
The bill the conference committee has been considering raises an additional estimated $89 million for the coming fiscal year.
But that comes after subtracting $59 million for the personal income tax cuts and $37 million for a Justice-backed severance tax tiering system that has also been controversial. That also only accounts for one, average 7-percent reduction of the income tax, not future reductions.
That bill, which proposes raising sales taxes to 6.5 percent and extending the sales tax to additional sectors of the economy, actually raises the least for the coming fiscal year out of any of the plans that have been discussed in recent weeks.
A plan passed earlier by the Senate was expected to generate an additional $147.3 million for the coming fiscal year, although that plan would raise the sales tax to 7.25 percent as a tradeoff for lowering the income tax.
The House plan passed a few weeks ago was anticipated to raise an additional $105.5 million for the coming fiscal year, mainly by extending the state sales tax to additional economic sectors such as telecommunications and communications.
That plan did not raise the sales tax overall and took a pass on the broadest aspects of lowering the income tax. It did exempt Social Security and veterans retirement from state income taxes.
All those plans would still leave the state shy of being able to balance the governor’s proposed $4.35 billion budget.
The other factor, though, is the possibility of increased revenue projections. The governor’s office has said it will raise the revenue estimate for the coming fiscal year to $4.225 billion prior to any tax increases.
MORE: Read the letter advising of increased revenue projections.
That largely depends, though, on a combination of actions the Legislature has already taken, the effects of improving energy markets and two more factors the Legislature has yet to take action on.
One of those is the roads bill that the governor believes will generate thousands of jobs and goose the state’s economy. The other is his severance tax plan that he believes will provide some relief to West Virginia coal companies.
The Justice administration is estimating $100 million in new revenue as a result of the economic growth anticipated from those two concepts.
That’s all a projection, and none of it would occur if the related bills don’t pass.
If more revenue remains to be raised to balance the budget, a sales tax increase of 6.5 percent has been under discussion at the Statehouse.
Another option might be one more use of Rainy Day funds, possibly to be backfilled if state revenue truly improves
And a final option could be the kind of cuts that were in the bill that Governor Justice vetoed after the regular session ended.
House Minority Leader Tim Miley, speaking a week ago, said an ideal plan from a Democratic perspective would be one that balances the budget for the coming year while avoiding holes in coming years.
“An ideal plan to me would be one that makes sure our budget holes are going to be filled not just for the 2018 fiscal year but also the out five or six years,” Miley said. “Also, one that has an economic benefit of growth and jobs, and we hope that happens with the road projects.”
Also last Monday, as the governor exited the long meeting with House Democrats, he said alternatives besides his own run the risk of including significant budget cuts. He vetoed an earlier budget bill that would have cut millions to higher education and the state Department of Health and Human Resources.
“The net-net of the whole thing is, if we throw this away and we go back to ground zero, there’s a lot of common everyday people that are going to get just killed,” Justice said.
“The alternative is going to have to be cuts. There’s no other way. If we lose this right now, there’s going to be so many just common everyday people are going to really get hurt.”