HelpCenter 

Statehouse Beat: Legislature has marching orders

You are here

Statehouse Beat: Legislature has marching orders
By Phil Kabler, The Charleston Gazette

Sitting through three consecutive hours of April interim meetings, in the same chair in the same committee room, provided a fascinating dichotomy.

At one point, we had the legislative leadership giving the new Select Committee on Tax Reform its ALEC marching orders, with Senate President Bill Cole, R-Mercer, blaming the state’s drop in ALEC’s “Rich States, Poor States” rankings on the fact other states getting the jump on, in his words, “aggressively cutting taxes.”

Soon after, legislators heard Transportation Secretary Paul Mattox explain how he’s scrambling to shift dollars from various cash-strapped Division of Highways accounts to scrape together $250 million to patch up the state’s pothole-ridden highways, reminding lawmakers they should be spending at least twice that amount if they want to keep state roads from falling into permanent disarray.

Legislators also heard Cindy Beane with the Bureau of Medical Services, explain why the state is planning to cut benefits for an in-home care program for West Virginians with severe developmental disabilities, explaining that the program has overspent its budget by “tens of millions of dollars” in recent years.

To recap: After blowing a self-inflicted $230 million a year hole in the budget with business tax cuts in 2008, the state is struggling to find enough money to keep its roads from crumbling or to provide needed in-home care for its most vulnerable residents.

The legislative leadership’s conclusion: ALEC says cut more taxes.

If you look at the ALEC report, West Virginia ranks pretty strongly in a lot of categories.

Our corporate net tax rate, reduced to 6.5 percent with the tax cut legislation, ranks 22nd in the country, while our property tax burden is 11th lowest, and sales tax burden is 18th.

Our workers’ compensation costs rank 8th best in the nation, and the state also ranks 8th in its debt service as a share of tax revenue.

(Those findings seem consistent with the hardly-left-leaning Tax Foundation, which ranks West Virginia’s business tax climate as 21st in the nation, and better than all our neighboring states.)

So what pulled West Virginia down to a 36th ranking in the ALEC report? Well, ALEC gave West Virginia a 50th ranking for its “state liability system survey,” i.e., tort litigation and judicial impartiality, and another 50th ranking because we’re not a Right-to-Work state.

We also got marked down because our state minimum wage is higher than the federal minimum wage. ALEC’s top ranking in that category goes to states that have NO minimum wage.

ALEC also didn’t like the fact that West Virginia’s personal income tax is progressive, meaning that folks with higher incomes pay more income taxes than the middle class or poor. We got bumped down to 41st because of that.

In other words, West Virginia is too friendly to the working class for ALEC’s taste.

The corporate interests that fund ALEC are strictly focused on assuring that big business gets lower taxes, less regulation, and legal protections from consumer litigation. They could care less if you bend an axle in a pothole, or if your child or a parent is denied needed in-home care services because the state is too broke to provide those services.

Back in 2008, the rollback of the corporate net and elimination of the business franchise tax was touted as way to make the state attractive to business investment, and that the subsequent growth in the economy would offset the lost revenue.

While developments such as the Macy’s distribution center and Procter & Gamble plant are encouraging (and perhaps driven more by location than tax rates), six years out, it’s clear that economic growth has come nowhere close to offsetting the lost tax revenue.

Finally, on the pretense of reducing expenses, the new leadership has gone away from the traditional schedule of monthly legislative interim meetings each covering three days to a truncated schedule of four two-day meetings over the course of the year.

Also on Monday, the Joint Committee on Government and Finance approved a 61-item list of topics that the interim committees are to study during the year.

Given statements from leadership that they intend to run the interim meetings from 9 in the morning to 9 at night (and presuming that no meetings overlap), that gives the Legislature 96 hours to analyze the 61 topics, which works out to a total of about 94 minutes per study topic, or about 23½ minutes per topic per interim session.

Given that some of the topics are fairly complex, with matters such as ethics reform, campaign finance reform, highways funding, a study of the state’s racing and gaming industries, with tax reform to boot, just to cite a few, it seems impossible that they’ll be able to thoroughly study all or any of the issues, since they’ve reduced themselves to about a third of the amount of time the Legislature usually devotes to interim meetings.