Priorities for the rest of the session
By Pamela Pritt, Register-Herald reporter
With fewer than 14 days before this legislative session adjourns as scheduled, lawmakers still have hundreds of bills to sort and prioritize. Some will make it into law, most will not. But first and foremost, the state must have a balanced budget.
And that balancing act is causing wear and tear on lawmakers who had hoped for a year of tax reform.
Senate President Bill Cole, R-Mercer, said taking care of the budget shortfall is job number one, in his estimation. The 2016 budget has a $354 million gap, brought about mostly by a slide in coal severance tax revenues that began last fall and has continued throughout the winter. Also, Gov. Earl Ray Tomblin predicted a budget shortfall for next year that he balanced with tax increases on tobacco products and telecommunications data packages, renegotiating a state contract for prescription drugs and paying off the debt on Workers Compensation early to save interest fees.
Some of those measures would also play into this year's budget crisis as would several budget maneuvers that took money from line items with unappropriated balances. Tomblin also incorporated a 4 percent budget cut that included a 1 percent cut to public education.
The Senate passed a tobacco tax that increased the per pack rate to $1.55, along with a 12 percent tax on other tobacco products and a tax on e-cigarette fluids. That was more than the governor's proposal, but the legislature did not take up the tax on telecommunications data packages
"Our Finance Committee is working day and night to look for areas where we can find efficiencies and cut, but we are aware that we must be open to increasing revenues," Cole said in an email. "Finding a solution to this budget crisis is going to require us to take a hard look at everything."
Senate Majority Leader Mitch Carmichael, R-Jackson, said this week that the legislature's leadership still has a focus on economic development, but dealing with the budget shortfall for the current fiscal year, and balancing next year's budget is the priority.
"We're moving down the path of (being) in a $500 million budget deficit, roughly," Carmichael said. "We want to find half of that in expense reductions. We believe it's possible."
Carmichael backed the increase on tobacco products, which will raise about $10 million, but Cole did not. Cole said in a statement that he feared raising the tobacco tax by that much would hurt border county retailers if residents chose to leave the state to purchase tobacco and also bought groceries and gasoline.
Carmichael agreed that it is time to tell state residents tax increases may be coming.
"We have to ask the people of West Virginia to chip in a little bit," he said. "We are recognizing that we are going to need additional revenue."
That request could include a fix for the state's crumbling roads which, according to the Blue Ribbon Commission, need $1 billion in repairs.
Carmichael said three proposals, including one of his, are still up for action. All of them would involve state residents chipping in.
The first is a road bond issue that would ask voters to approve an extra percentage on their property taxes, which now go into county coffers. The extra percentage would go to the state's road fund and would raise about $2 billion, Carmichael said.
His proposal would keep the tax on gasoline at a steady rate when the price of gas goes down, instead of staying at a percentage which causes the amount of tax collected to decrease, as well. Carmichael's plan would raise about $30 million, which he says is "a lot of potholes."
Sen. Ed Gaunch, R-Kanawha, has also offered a plan for roads that includes:
• an increase in DMV fees, license fees
• a 5 cent tax increase on diesel fuel
• fees to alternate fuel vehicles of up to $200
• decreasing the privilege tax on vehicle purchases from 5 percent of the trade-in value to 4 percent of the purchased vehicle cost
• increasing the state consumers sales tax to 6.5 percent, with the extra half-percent dedicated to roads
• transferring the tax collected on parts and repairs from the general revenue fund to the State Road fund.
The plan generates $265 million for the state's crumbling infrastructure.
"Our roads definitely need attention, and similar to how we have to approach the budgeting process, we cannot take anything off the table right now," Cole's email said. "In my mind, infrastructure is economic development. We have done a tremendous amount of legal and regulatory work to encourage growth, and we need to bring infrastructure in as the next component."
Cole said Gaunch's plan is "comprehensive," and has some good points to consider, but noting "the bond market is incredibly favorable right now.
Lawmakers have proposed eliminating subsidies for greyhound racing and have agency reports that detail what a 6.5 percent tax cut would look like. After two straight years of 7.5 percent budget cuts and another 4 percent cut, as well as three years of hiring freezes, Carmichael has one word for what further cuts will mean for those agencies.
Some of those cuts will be in personnel, which Carmichael said legislative leadership hopes can be done through attrition and not filling positions that are currently open.
What they want to be doing, though they have said, is creating jobs for state residents. Measures passed early in the session like right to work and repealing the prevailing wage are forecast to help the state attract new business and industry. They came with controversy, however, angering union workers who frequented the capitol for weeks attending committee meetings and chamber floor sessions.
Legislative leadership is also dealing with a projected $120 million shortfall in the Public Employees Insurance Agency's 2017 budget. The increased cigarette tax hike will fund PEIA's reserve fund, which has dwindled to about $136 million.
Carmichael said PEIA is fully funded "this year and next year," but Carmichael said the legislature will look at ways to "make sure the (PEIA) board members do a better job of managing that program." A bill that passed the Senate Government Organization Committee would change the make-up of that board and may only allow two current members to serve.
"They basically ran the program in the ground and then came to the legislature and said, 'You've got to fix this,'" Carmichael said. "We want a long-term fix instead of short-term."
Cole said lawmakers will pass a budget that has an eye on the state's future.
"I’m confident when the Senate passes its budget, we are going to be in a place where our bills our paid, our obligations to our public employees are fully met and we are positioned to turn things around and improve our bottom line," his email said.