Revenue debate now headed to conference commitee

CHARLESTON, W.Va. — Differences over a revenue bill meant to be a key component of a state budget for the coming fiscal year are now to be worked out in conference committee.

After days of behind-the-scenes negotiations, the state Senate appointed a conference committee consisting of Majority Leader Ryan Ferns, Minority Leader Roman Prezioso and senators Craig Blair, Ed Gaunch, both Republicans, and Glenn Jeffries, a Democrat.

The Senate appointed its conferees during a 10 a.m. floor session. Neither Senate Finance Chairman Mike Hall nor Senator Robert Karnes, who led the Select Committee on Tax Reform, was named to the conference committee.

At the House floor session, which wound up starting at 2:30, the committee named included Finance Chairman Eric Nelson and delegates Paul Espinosa, Carol Miller, Republicans, and Brent Boggs and Dave Pethtel, Democrats.

The committee met for about an hour Wednesday afternoon, agreeing to do the heavy lifting starting at 9 a.m. Thursday. Nelson says there should be a strike-and-insert amendment and some fiscal estimates to view by tomorrow morning.

Differences over the revenue bill appeared to be headed to conference committee two weeks ago, after the House refused to concur on a revenue bill passed by the Senate. But at the time, Gov. Jim Justice said he would like the time to negotiate with the leaders of the Senate Republicans, Senate Democrats, House Republicans and House Democrats.

After several rounds of meetings with the groups, Justice proposed a compromise revenue bill that would raise the state sales tax to 6.35 percent and reduce the personal income tax by an average 7 percent reduction the first year, and triggered reductions of a 7 percent average the second year and 6 percent the third year.

MORE: Justice says anyone who stands in the way of budget deal should be called out

MORE: A handy guide to increasing revenue projections

Since the special session resumed this week, legislative leaders have been negotiating behind the scenes to try to reach clearer consensus on a revenue proposal. One of the changes out of that included changing the sales tax to 6.5 percent, a number cash registers can handle.

“I really think for the first time in the last couple of days we have come closer than ever to having something that all four groups can live with. No one’s completely happy, but we’re getting to the point where everyone’s giving something, everyone’s getting something, maybe we can all live with this and go home,” Senate Majority Leader Ferns said.

The conference committee is a way to shape a few remaining details of the agreement, in particular the triggers that would determine how and when the personal income tax could be reduced, Ferns said.

“The one major sticking point that we didn’t feel like we could sort out in that rather large group was triggers — various numbers of triggers,” said Ferns, R-Ohio.

“There are triggers for the out years beyond the first three in the reduction of the personal income tax, there are triggers for the second and third year in the reduction of the personal income tax, there’s been discussion about other triggers bringing the sales tax back down at some point if certain revenue numbers are hit.”

The overall proposal has been taken to various caucuses to try to inform members of both houses and both parties, Ferns said.

“After yesterday, the representatives of each group were taking the framework back to their caucuses with the understanding that these triggers still need to be sorted out,” Ferns said. “So each group is hoping to get support from their caucus.

“Essentially what everyone is saying about the triggers, particularly between the second and third year in the reduction in the personal income tax — particularly the Senate Republicans want it to be fair and certainly achievable, and some of the other groups want assurance that if these triggers are met that they won’t blow a hole in our budget.”

Prezioso, the minority leader, agreed that details will be the focus of the conference committee.

“I think right now we’re in the situation where we’re trying to validate the numbers to make sure all the numbers work out,” said Prezioso, D-Marion. “The triggers aren’t yet in the bill for the income tax, and we’ll be working on those, I’m sure.”

During a Tuesday afternoon news conference, Governor Justice said he has been supportive of the income tax reductions because the Senate Republicans have consistently expressed that as a top desire.

“The Senate, just think of how much they’ve given, how far they’ve come,” Justice said. “They started out with a 20 percent reduction in the income tax. Then they were willing to go 15 in one year and 5 in the next. Then we went to 12 to 8. Then we went to 7,7 and 6. Then we went to 7 and triggering and 7 and triggering and then 6.

“Let’s be fair. They’ve come a long, long ways. Because they’ve wanted to help.”

Justice said he feels comfortable with the triggers that would result in personal income tax cuts in future years.

The governor said how much a broad income tax reduction would stimulate the economy is a matter of debate. But he said he believes in giving a tax break to average West Virginians — although other taxes, like the sales tax, would increase in response.

“I personally believe that lowering the income tax 7 percent or another 7 or a 6, it is argumentative if that’s going to bring people to our state,” Justice said. “I personally believe it will be a great move for our image and a great move to potentially bring people to our state.

“But here’s the fact that’s not argumentative: At 7 percent and triggering, we are completely safe from the state standpoint. We are completely safe and the numbers completely work. And here’s the thing: If the numbers work and you were completely safe, why would you not want to give money back to the guy that’s mowing the grass out here?”

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