CHARLESTON, W.Va. — Senator Ryan Weld, among those being called back to Charleston next week, is hoping there will be no repeat of last year.
“I struggle with that because I was in the House last year,” said Weld, R-Brooke. “I’m not real certain I can point to a more miserable time in my life than that month I sat there, and I’ve been to Afghanistan, so that’s saying something.”
His unpleasant memory stems from the 17-day special session required to settle on a state budget last year.
Gov. Jim Justice announced that he will bring the Legislature in next Thursday for a special session to hammer out a deal on the budget for the coming fiscal year.
The trick is, although there appears to be a deal in place between the governor and Senate leadership, the Republican majority in the House has been objecting to it. Speaker Tim Armstead also says the House has been frozen out of recent budget talks with the governor.
To that uncertainty, add a few more factors: A tiered system for severance taxes remains up in the air, with coal and natural gas representatives in talks with elected leaders; a controversial commercial activities tax is being switched to an increase in the corporate net income tax; and a proposal to reduce the personal income tax while raising the states sales tax is under scrutiny.
So it’s an act of faith — or a gamble — by Justice to bring the Legislature in without being certain of the outcome.
Speaking Thursday on MetroNews’ Talkline, Justice administration Chief of Staff Nick Casey expressed confidence, although he acknowledged the wild card of the House.
“I think that Senate/governor’s office pathway is formed up,” Casey said. “We’re hoping the House will review that pathway and decide that’s a good place to go.”
Legislators, many of whom have spent weeks since the regular 60-day session ended April 8 going about their regular lives, are still trying to wrap their minds around the task in front of them.
House Minority Leader Tim Miley, also speaking on “Talkline,” wondered about the wisdom of bringing lawmakers back to Charleston without an agreement nailed down in both houses.
“I hope there is an agreement reached, not just in principal, not just in framework, but in having all the Ts crossed and the Is dotted with the Senate and then take that over to the House leadership and make sure there’s an agreement with them in some form before we come down to Charleston spending a lot of time and money in a special session that may prove to be fruitless,” said Miley, D-Harrison.
Miley said last year’s experience was a real lesson in nailing down the plan prior to convening.
“I know some people might think well, let’s put it up to a vote so we can move on to something else if this fails,” Miley said.
“But I’ve never known it to work that way very efficiently. When Governor Tomblin and, prior to him, Governor Manchin had special sessions you work out these issues before you convene if you can because otherwise it turns into what happened last year with what was a 4- to 5-week special session.”
The minority leader said one issue has been keeping track of the changes to the possible budget package as negotiations have developed.
The tiered severance tax proposal has been contentious for metallurgical coal producers who feel like they could be hit by higher taxes just as their economic sector is enjoying something of a recovery. So ongoing talks have focused on reaching agreement on that issue.
The commercial activities tax has been criticized as punitive to business because it doesn’t take into account whether there are profits or not. Governor Justice has wanted the tax as a way to ensure business plays a role in resolving the state’s fiscal woes.
Casey said on “Talkline” that a new framework would instead raise the corporate net income tax from 6.5 percent to 8.5 percent.
Democrats have been concerned that changes to the personal income tax would represent a break for wealthier state residents. Justice and Casey have generally talked about increasing a break for the bottom tier. “I think they’re jiggering with some numbers on income tax to address those concerns,” Miley said.
Suffice to say, parts of the plan are still moving.
“That’s the difficulty and frustration I’m feeling. It’s always changing. At this point, I think we’d better get people committed in writing to what they’re willing to support,” Miley said.
“It starts affecting the numbers and the numbers you’re counting on to get to a certain destination when they start getting adjusted because of things falling apart along the way. That’s where the most important issue lies. OK, what are the numbers we need to get to and are we strong in getting there?”
House Majority Leader Daryl Cowles suggested a more effective path might be focusing on the budget gap, rather than also dealing with issues like changes to the income tax backed by the Senate or the highways funding package backed by the governor.
“Since that’s our problem why don’t we simplify things and try to solve that. Let’s set aside tax reform, let’s set aside new programs and try to solve the budget gap,” Cowles, R-Morgan, said in a telephone interview. “That’s simplifying the issue before us.”
Focusing on the budget gap is an easier fix, Cowles said.
The Legislature already agreed to some measures like foregoing the governor’s Save Our State fund, smoothing out payments to the teachers retirement fund and redirecting workers comp debt funding back to the general fund.
Legislators also agreed to continue the 2 percent cuts to state agencies that started under then-Gov. Earl Ray Tomblin. Lawmakers are willing to forego a 2 percent average payraise to teachers, although the governor might not be. And there’s general agreement to end a transfer from general revenue to Highways.
Add all that up, and the fiscal gap is somewhere around $200 million.
Solving that problem could be accomplished through some blend of cuts, tax increases or use of the Rainy Day Fund.
“I would just like to focus on that. Maybe it’s a patchwork of all three things,” Cowles said. “I’m willing to negotiate and compromise with my colleagues and that’s what I think we should focus on.”
If that doesn’t occur, it’s anyone’s guess what might happen. The most likely scenario is that revenue bills and a budget bill pass out of the Senate, where the most support exists for the components of the compromise.
Once it’s in the House, any potential amendments on second reading will be the defining moment, Cowles said.
“That’s where the key is going to be, is what happens on second reading,” Cowles said. “Do we try to fix it so it’s acceptable to the House or do we give it a thumbs down and send it back to them?”
“It’s probably easier to sit down and come to some sort of framework agreement between the House and Senate and governor, but absent that it looks like we’re going to pass the bill back and forth until we reach some sort of conclusion. It’s certainly not the preferable way to go, I don’t think.”
Despite that, Cowles said he is optimistic about solving the problem.
“I think revenues are picking up. I think the budget is going to get a little easier. The idea of compromise and settlement of this issue is ripening every day. There’s reason to be optimistic,” Cowles said.
In the Senate, where there seems to be more consensus up front, lawmakers like Weld are already trying to assess what’s in store.
“From the Senate side, it’s a little easier to say we’re informed. It was always our tax reform package that was going to be a large part of the deal,” Weld said in a telephone interview.
He said some sort of compromise with the governor seems inevitable.
“I’ve never served in the Legislature with a governor of my own party but at some point you have to agree with him on something, budget-wise.”
Senator Ron Miller, a Democrat from Greenbrier County, has spent the past few weeks working on his farm, logging in at lunchtime to check on the status of bills and catching up on politics. Miller is trying to learn more about the possible budget before returning to Charleston.
“I just haven’t seen it,” Miller said. “I guess the big question for me is, has there been an agreement reached before we come down there? Is everybody on the same page or close to being on the same page? I don’t know the answer to that.”
As he’s checked his email, Miller has come across news releases in his inbox from Republican delegates objecting to the governor’s proposals.
One was titled “Delegate Kessinger Stands With Speaker Against Governor’s Tax Increases.” Another was “Delegate Gearheart Applauds Governor’s Recognition of W.Va. Families’ Financial Struggles” — a take on the governor’s objection to $2 entry fees for state parks.
The news release didn’t give Miller the feeling that consensus is at hand.
“I’ve been shocked by that. These are from people who don’t normally issue those,” Miller said. “So I have to worry about the votes in the House. Where are the votes? Where are they and who are they?”
Senator Corey Palumbo, a Democrat from Kanawha County, is also trying to become familiar with the specifics of the potential budget deal.
“It’s hard without knowing the nuts and bolts of what the plan is. I think what we still need to see are the actual numbers, what it’s going to do in the out years, what it’s going to do to people in different income brackets,” Palumbo said in a telephone interview.
“The earlier the details are provided to legislators, the better chance there is for having an efficient session. When the specifics of the program and actual bills are provided a few days before the session starts, I think you have better chance of having a more efficient session.”
Like everyone else, Palumbo was wondering what will happen once a budget bill hits the House.
“That’s sort of a calculation the governor’s office has to make. It seems unlikely that the plan that’s being discussed with Senate leadership and the governor will ultimately pass the House when the leadership of the House is against it.
“I don’t’ know how the rank and file House members feel about it. Is there enough support among membership to get it passed? I would imagine the governor’s office has been surveying it. I would imagine it’s a big stumbling block to not have the House leadership support it.”