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House Speaker: There are other ways to fill budget shortfall without tobacco tax bill

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House Speaker: There are other ways to fill budget shortfall without tobacco tax bill
By Shauna Johnson, WV MetroNews

CHARLESTON, W.Va. — Tobacco tax increases are no longer in the mix of possible funding sources as state lawmakers continue work at the State Capitol to close an estimated shortfall of between $160 million and $180 million in the next West Virginia budget.

House Speaker Tim Armstead (R-Kanawha, 40) said all was not lost, though, after the House Finance Committee overwhelmingly rejected the tobacco tax bill with a 3-21 vote on Thursday night.

The vote came after SB 420 had been amended to include a 45 cent per pack tax increase on cigarettes, lower than the $1 increase the Senate had approved, and after tax increases for other tobacco products along with a new electronic cigarette tax were removed.

Without new tax revenues, Armstead said lawmakers are looking at individual agency account sweeps, which members of the House Finance Committee have been reviewing.

“There’s still a lot of money in this budget that can be swept, can be cut without having any types of layoffs or anything like that,” he said.

A dip into the Rainy Day Fund ahead of the 2017 fiscal year, Armstead noted, would not be unprecedented.

“Let’s keep in mind that the Rainy Day Fund, the name of it is the ‘revenue shortfall fund.’ Well, this is revenue shortfall,” Armstead argued. “We’re going to have to look at that. No one likes to go into that, but it certainly may be necessary to do that.”

During an appearance on Friday’s MetroNews “Talkline,” Armstead told Hoppy Kercheval no one can accuse the House of not at least considering the tobacco tax bill.

“We ran it (in the House Finance Committee) and every single Democrat on that committee voted against it,” Armstead said.

“And all but three Republicans voted against it too,” Kercheval said.

“Right,” Armstead responded. “But we knew it was going to be a heavy lift to get a tax increase with our caucus.”

In January, Gov. Earl Ray Tomblin proposed a 45 cent per pack tax increase on cigarettes with a plan that would have dedicated some of the new revenues to the $120 million funding shortfall within the Public Employees Insurance Agency, the health insurance plan for state workers and retirees.

Tomblin had wanted the tax hike to take effect on Apr. 1 to help with next year’s budget shortfall and a projected deficit of $354 million during the current fiscal year, a number that state revenue officials reported Thursday was “trending upwards.”

The 2016 Regular Legislative Session closes next Saturday, March 12.