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No new taxes as budget tightens

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No new taxes as budget tightens
Hoppy's Commentary | Hoppy Kercheval, Talkline

From the start of the session, much of the discussion by lawmakers and Governor Tomblin has been about increasing taxes and fees.

Tomblin proposed a tobacco tax increase and an elimination of the sales tax exemption (a de facto tax increase) on telephone services.  The Senate upped the ante by more than doubling Tomblin’s cigarette tax increase to $1 a pack, as well as raising another $300 million for highways by increasing the consumer sales tax, DMV fees and the wholesale tax on gasoline.

But then came the House of Delegates.

Republicans have a significant 64-36 advantage, and many in the majority party came to Charleston with either a promise to their constituents or a philosophical belief that state government has gotten too big and taxpayers are already on the hook for too much.

House GOP leaders were willing to sign off on Tomblin’s .45-cent cigarette tax increase, but the majority of the caucus was having none of it.  For that reason, as well as the Democrats holding out for a $1 increase, the tobacco tax was shot down in committee.

The Senate’s huge tax and fee increase to fix the roads was a non-starter in the House.  According to one source, perhaps only as many as 15 of the 64 Republicans would support raising DMV fees. (They’re convinced Democratic support for a DMV fee increase bill in 2011 that Governor Tomblin vetoed–after proposing it–cost Democrats the majority.)

The tax-averse attitude by House Republicans essentially forces the Senate to work with the House budget when conferees try to hammer out a deal starting next week. Assuming they get a deal, it will then be up to Governor Tomblin to see if he accepts the plan, which may well include another dip into the Rainy Day Fund (for $32 million) and a sweep of agency cash accounts for another $73 million, which Tomblin administration officials question is possible.

They’ll figure it out, but there is a larger question looming.  How much government can West Virginia afford?

Coal’s downturn has dramatically reduced the amount of tax money coming into state coffers. No one believes coal will be booming again soon, if ever, which means this year’s budget balancing struggle is the beginning of a trend.

Senate President and Republican Gubernatorial candidate Bill Cole believes the answer lies in fundamentally changing the way government operates.  “I think this government simply needs to be restructured,” Cole told me Tuesday on MetroNews Talkline.

“We need to ask some simple questions: ‘Why do we do it that way?’ The answer in state government is, ‘Well, that’s the way we’ve always done it.’ Nobody ever asks the tough questions and actually drill down,” Cole said.

Cole may get his chance to do just that if he prevails in November, but radically changing government would be a massive challenge. The nature of a bureaucracy is to provide for the relentless pursuit of the status quo.

As long as the makeup of the House remains the same or until the state’s economy gets rolling again, the prevailing issue at the Capitol will be the growing conflict between the services people expect from their government and the increasingly limited resources to pay for them.