CHARLESTON, W.Va. — As criticism grew across the state Monday evening, the House of Delegates voted to table a bill that would have lifted the current sales tax exemption on professional services in West Virginia while lowering the overall overall sales tax (HB 2704).
The move came on a 92-2 vote after the Republican majority voted against tabling the bill earlier in the day.
“In where we are right now, we need to slow down a little bit, step back and make sure we don’t make any rash decisions here at the end. That was a primary reason for tabling it,” said Del. Eric Nelson (R-Kanawha) told MetroNews following the vote.
House Democrats were quick to take credit for the turnaround, essentially killing the bill.
“I’m glad the Republican majority saw the value in the efforts of the Democratic minority to kill this historic tax increase bill,” House Minority Leader Tim Miley (D-Harrison) said in a prepared statement.
The bill, which saw bipartisan support in the House Finance Committee when the committee approved it back on Saturday, proposed current tax exemptions for a list of professional services, including those rendered by lawyers, certified public accountants, media advertising, public accountants, architects, professional engineers and veterinarians, to be lifted effective on or after Jan. 1, 2017.
After Dec. 31, 2016, the proposed legislation would have lead to a decline in the state sales tax — from six percent to 5.5 percent immediately. Additional scheduled declines would follow, if certain levels of funding are maintained in West Virginia’s Rainy Day Fund accounts.
Projected revenue estimates in connection with lifting the exemptions stretched to more than $300 million. The state is facing a current revenue hole of more than $350 million this budget year.
Various criticism and concern about the bill grew through the day Monday. The West Virginia Democrat Party took to social media saying House leaders wanted to raise taxes on the elderly and working West Virginians.
“Various things can be said, and its an election year. Many comments will be made, good, bad and indifferent,” Nelson said addressing the criticism. “At the end of the day, let’s step back and have some common sense approach and make sure we don’t rush into decisions that will negatively affect us.”
Nelson told MetroNews it was not a mistake to pass the bill out of committee Saturday.
Senate Finance Committee Chair Mike Hall (R-Putnam, 04) said the Senate considered a similar measure, but rejected it because of uncertainties about the revenue effects. Revenue projections range anywhere from $50 million to $350 million annually.
“Until you actually go there and see it for four or five years you really wouldn’t know,” Hall said. “We’d be into another situation where you’re playing with a revenue that’s unpredictable and that’s what’s hurt us now.”
Nelson had admitted the bill was a “risk.” “This is one individual that says, ‘Hey, let’s slow down,’ we’ve got a huge, huge gap for 2017, 60 days is a short time to do this,” Nelson said during an appearance earlier Monday MetroNews “Talkline.”
“Let’s slow this thing down and maybe we need some extra time outside of our regular session to truly address our structural imbalance that has been created in our budget.”
Less than two weeks remain in the 2016 Regular Legislative Session and budget work is continuing in both the House and Senate as state officials work to fill a budget hole this year while attempting to address expected budget shortfalls during the 2017 fiscal year.
“In the next two weeks we’re going to have to fill that gap one way or another,” Nelson said.