Budget negotiations take on a new flavor at the Statehouse

CHARLESTON, W.Va. — Budget negotiations at the state Capitol are taking on yet another look.

Over the past couple of weeks, with the special session on hiatus, Gov. Jim Justice acted as “mediator-in-chief,” separating the various legislative caucuses into different rooms and then walking room-to-room to try to find common ground on a budget strategy.

Now, with the session resuming this week, legislative leaders are getting together on their own, in the same room, to try to determine a budget solution.

That comes with less than a month until the new fiscal year begins July 1.

Leaders of both houses and both parties privately said Monday that they were hopeful the latest talks would produce an effective result and that the earliest sessions had gone well.

A House Finance meeting that had been scheduled for 10 a.m. today was postponed so that the bipartisan discussions could continue. That meeting presumably would have offered committee members a first crack at a compromise revenue plan put forth last week by Governor Justice.

House Democrats were among those not immediately persuaded by that plan, and they spent three hours in a private session with Justice on Monday. The Democrats later caucused to discuss their impressions of what Justice had said but never took any kind of vote on their group’s position because the other bipartisan discussions had already changed the trajectory of the renewed session.

Discussions similar to the ones happening now have also happened all along, but there was almost always some group feeling left out. For a time, House Speaker Tim Armstead complained of being frozen out as the Justice administration pursued a compromise with Senate Republicans. Later, Democrats of both parties described being left out.

The special session, which will be on its 12th day today, has been a start-and-stop affair with several stalemates.

Legislative leaders are looking to fill a budget hole most recently estimated to be about $250 million for Justice’s proposed budget of about $4.35 billion.

When the full Legislature was last in town May 26, Senate Republicans — with no Democratic support — voted to pass a revenue plan that would have raised the sales tax to 7.25 percent while cutting the personal income tax six months later and then again in the coming years.

About an hour later, the House of Delegates voted 85-0 to refuse to concur.

A few days prior to that, the House of Delegates passed a revenue bill with no increase in the sales tax and without the broader income tax reductions. It instead raised revenue by extending the sales tax to some economic sectors that earlier had exemptions. It also extended income tax exemptions to military retirement and Social Security.

Justice’s proposed compromise, which took shape during the room-to-room negotiations, would have raised the sales tax to 6.35 percent and lowered the personal income tax over three years, with economic triggers required to activate the second and third years.

That proposal also broadened what is subject to sales tax, including a controversial proposal to tax most contracting services.

On Monday, as he exited the long meeting with House Democrats, Justice 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.”

Tim Armstead

House Speaker Tim Armstead offered a different point of view Monday while appearing on MetroNews’ “Talkline.”

Armstead predicted a barebones budget won’t be necessary. The context of his remark was recent state revenue reports that have included an upswing from energy sectors.

“That means those cuts would not have to be as drastic,” the Speaker said on “Talkline.”

Armstead alluded to new territory for the recent talks.

“People certainly want a resolution, but they also want a resolution that is a good idea. So they still are working hard to find solutions to the various parts of this. There are just so many moving parts.

“Different people have come forward, I think, in a very creative way to say ‘How about we do this or that.’ And there are certain components we already know from the special session that either will or won’t go. So I think we’ve started to exclude some things. I think we’ve started to come up with maybe some different ideas in the middle.”

No compromise will be easy, said Armstead, R-Kanawha.

“I think whatever we pass will be close because you have a lot of different viewpoints on this,” Armstead said.

“We know that there are going to be some members in each of those camps that won’t move away from what their positions are, so they won’t end up voting for whatever the agreement comes that puts the components of those plans together. But that’s our challenge to get 51 votes in the House, 18 votes in the Senate and a plan the governor will sign.”

Tim Miley

House Minority Leader Tim Miley, speaking after Monday’s House floor session, 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.”

The road projects are a reference to Governor Justice’s plan to pump $2.8 billion into highways and bridge projects around the state, financed largely through increased taxes, fees, tolls and bonding.

“Now we also recognize that the road projects no matter when they’re completed are going to be temporary in nature,” Miley said. “But that will give us a bump in economic activity for the state while hopefully other areas of our state improve — for example, the oil and gas industry, hopefully the coal industry, as well as additional improvements in tourism and other economic impacts.”





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