Justice and Carmichael felt close to a deal; House felt bushwhacked

CHARLESTON, W.Va. — Gov. Jim Justice and Senate President Mitch Carmichael sounded excited about a potential budget deal.

House Speaker Tim Armstead was less enthusiastic, but then, nobody actually told him about it.

Justice and Carmichael were engaged in budget talks that got more and more serious about mid-afternoon Saturday, the final day of the legislative session. The talks started via text and apparently included at least one face-to-face discussion, with Carmichael looping in his Senate majority caucus throughout.

But Armstead and the rest of the House knew nothing of those negotiations until 10 p.m., two hours before the midnight finale, when Justice appeared at a previously-scheduled news conference and described his enthusiasm over the progress made with Carmichael.

The governor described his own ideas, including increased gas taxes for road construction and a corporate activities tax blended with the Senate’s desire for a stepped-down income tax and a mutually agreed-upon increase in the state sales tax.

The governor was careful not to call it a deal yet described the structure with gusto and detail.

“We’re not there yet, but we’re hopeful,” Justice said as the midnight finish of the legislative session drew closer. “Wouldn’t it be something that at the close of business tonight we’re there.”

The situation was serious enough that what Justice describes actually appears in an amended tax bill — one that the House had passed as its vehicle to “broaden the base” of economic sectors subject to sales tax and to lower the sales tax overall. It never saw  the light of day.

Over in the House, lawmakers were learning about what happened through reporters’ tweets and, in some cases, via livestream video from the governor’s office. Delegate Riley Moore, R-Jefferson, came to the Governor’s Reception Room toward the end and asked what had happened.

Armstead said the final day of the session had been busy as usual, but this was particularly unusual.

“We were preoccupied tonight, passing the legislation we had to pass, but I did hear there were discussions the governor had put forward an additional proposal. I have kind of lost track of how many proposals that is, but an additional new proposal,” said Armstead, R-Kanawha.

“I’ve talked to members of both parties, particularly in the House and other Senators who had no idea this existed before the governor made that announcement.”

Armstead is still willing to listen but he feels like he’s heard a lot of this already.

“He may have some support within the Legislature and we’re willing to sit down with him.  But if it’s the same proposals he’s made throughout the legislative session I’m not sure what would change the level of support for those today,” Armstead said about 1:30 a.m Sunday.

As talks of a budget framework between Justice and the Senate kicked up, House staff was proofing what it thought was the budget bill to be passed. That document was a version that House and Senate leaders and staff had worked out over the course of last week.

That’s why Eric Nelson, the House Finance chairman, was flabbergasted.

“No prior comment. No prior communication. You’ve seen me over there today, worried about the budget, going up stairs, wondering where we are,” said Nelson (R-Kanawha).

“What’s wrong, whatever may have come out from the governor, absolutely no communication with anybody on this side of the Capitol. A hundred members and you have 60-some Republicans. The Speaker, nothing. The House Finance chair, nothing. Come on, give me a break. You’ve got to have that type of communication before you go forward.”

The budget the Senate wound up voting on and sending to the House was actually the version the two sides had hammered out Wednesday.

MORE: The Legislature passed a budget, but what’s in it anyway?
HOPPY KERCHEVAL: Legislative session ends but still work to do on budget

Carmichael (R-Jackson) said discussions with Justice ran right up to the wire and there was not enough time to finalize a deal.

“You know there’s not really time to work it through the process. I want to commend the governor for coming to the table with this proposal. I want to commend the Senate, who seemed willing to embrace that concept,” Carmichael said just after midnight.

“We were on the verge of doing that and then some components of the bill raised some issues so we just felt like it was the more prudent approach to take a little more thought to it, take a day or two to review those concepts and then fully inform our House colleagues on it.”

Justice described staying late at the Capitol on Friday and going home discouraged because he felt negotiations were stalled.

“We just didn’t move,” Justice said. “And so when I left here late last night it wasn’t good.”

He’d had his phone on silent and said it took him a long time to notice a text from Carmichael. When the governor replied Saturday morning, he said he “felt almost hopeless.”

“I look at Mitch as a real friend and I always have,” Justice said. “I told him ‘I don’t think this is going anywhere.’”

The two began exchanging texts, both Carmichael and Justice said Saturday night. And by 10 p.m. Justice claimed the situation was coming together.

Senate Majority Leader Ryan Ferns told reporters he was not directly involved in discussions with Justice but that Carmichael kept him and other Senate Republicans informed throughout the day.

“On the last day of the session, we’re all running around a lot of different directions. I wasn’t personally sitting in on a lot of the different conversations. I wasn’t sitting in on whatever the last conversation he (Justice) had with the Senate President this evening,” Ferns said about 5 minutes after the Senate passed the budget Saturday night.

“We were caucusing the entire time, the president was giving us feedback. We caucused multiple times today. Based on what he was learning, he was relaying it to us and we were providing our feedback.”

Ferns (R-Ohio) said it wasn’t his impression that a deal fully firmed up.

“I don’t think a deal was ever finalized. There were certain portions of our tax plan the governor may have agreed to. If he was willing to do that, there were certain things we were willing to consider too. But no agreement had been met.”

Carmichael said it was very close: “We were right up to the brink.”

He described a meeting with the governor and his staff this way: “Incredibly encouraging, incredibly enthusiastic. Optimism was in the room. We were on the brink of getting a deal. I think that deal structure remains in place.”

The Senate president apologized about the House being out of the loop.

“The House wasn’t brought into it fully to analyze it, and I feel bad about that because it happened so late and we just want to make sure our House colleagues are fully informed,” said Carmichael.

The path ahead would start with a gubernatorial veto of the budget the Legislature just passed.

Then, Carmichael envisions the administration, leaders of both Houses and Democratic leadership working behind the scenes to come to mutual understanding.

Only after that, Carmichael said, would a special session be called. In that scenario, a new bill could be drafted for whatever revenue measures could be necessary for a compromise budget.

“It’ll be a special session, but we’ll have agreement to it prior to calling the special session, working with the governor on it,” Carmichael told reporters. “It’ll be an agreed-to scenario in which we won’t have to go through and validate each line item in a document that’s 500 pages.

“I’m hopeful we can get this done very quickly. There’s people of goodwill working on it. This is big movement and we’re very pleased.”

Armstead, not so much.

“I am concerned because my understanding of the proposal that is out there now is that it contains the commercial activities tax, it contains other increasing of the sales tax, which has been greatly opposed by our caucus,” he said.

Earlier this session, the House was in direct discussions with the governor and his staff. On March 30, Justice called a news conference and expressed disappointment that a deal with the House was “at the altar” before it fizzled.

Later that afternoon, after caucusing behind closed doors with House Republicans, Justice had grown more optimistic. Those swings taught Armstead that the governor’s positions are sometimes living in the moment.

“I think the governor tends to have a discussion, and if he feels like he’s making progress he goes out and he’s said a few times during the session that he’s right there. He said that a few times with us. He said we were right at the altar. We were not. We were discussing.”

Armstead said there seems to be little support in the House for the governor’s proposed commercial activities tax or for raising the sales tax, but he does believe some sort of compromise remains possible before the new fiscal year July 1.

“I can’t speak for the Senate, and I don’t know where they are. We’ve had discussions as recently as today but those proposals do not have that support,” Armstead said.

“We’ll continue to work toward a solution and I suspect that in the long run there may be components of different plans that will become components. It won’t be the plan we put forward or the Senate put forward or even what the governor may envision.”

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