House rejects tobacco tax hike bill, the only new revenues in budget proposals
By Shauna Johnson, MetroNews
The crafters of West Virginia’s budget for the new fiscal year that begins on July 1 have more work to do. On Tuesday, the House of Delegates rejected SB 1005, the tobacco tax bill, with a 44-55 vote following more than three hours of debate.
House Finance Committee Chair Eric Nelson (R-Kanawha, 35) called the bill a “primary revenue component” of the 2017 budget.
“This is one component of a balanced approach to balancing our budget,” Nelson told his fellow House members of the more than $70 million the tobacco tax bill was projected to bring in next year prior to Tuesday’s vote.
“It also ensures that we will resolve the current impasse of unnecessary worry that is on our senior citizens, our college students, teachers, retirees and state employees.”
The proposal had included a 45 cent increase to the existing 55 cent per pack tax on cigarettes sold in West Virginia with a July 1 effective date.
The first $1 million from the tax was designated for tobacco cessation programs while the next $43 million was earmarked for the Public Employees Insurance Agency.
For all other tobacco products, the wholesale tax would have gone from seven percent to 12 percent, also effective on July 1 as written.
Within 60 days of July 1, the start of the new fiscal year, retailers would have been subject to the new taxes on inventory, according to the provisions in the rejected bill.
Unlike the Senate version of the tobacco tax bill, the House version did not include new taxes on electronic cigarettes and vaping materials. The monetary impact of the removal, which was approved with a 52-43 vote Monday, was estimated at $1.8 million, according to legislative estimates.
A lot was riding on Tuesday’s vote.
The separate versions of the Senate and House budgets, while different, included new revenues from anticipated tobacco tax increases — the only new revenues being considered in this Special Session.
Delegate Frank Deem (R-Wood, 10) called on his fellow lawmakers to do what he thought was right for West Virginia. “The public is looking at us as a do-nothing Legislature. Whether you like that or not, that’s the way we’re being perceived,” Deem, a supporter of the tax hike, said.
For more than three hours, House members debated the bill on the floor of the House of Delegates as a Special Session continued.
Proponents, some of them reluctant, pointed to the critical need for additional revenues to fill the projected $270 million shortfall in next year’s budget.
Opponents, though, had different philosophies. Conservative Republicans argued for no new taxes at all while many Democrats claimed the proposal did not do enough to address West Virginia’s health and revenue needs, including full funding for PEIA.
Delegate Justin Marcum (D-Mingo, 20) was one of the opponents.
“This is basically like putting a Band-Aid on a broken leg,” he said. “We’re here to solve the problems of West Virginians and what are you doing? Kicking the can down the road to November, January. What are we doing? We’re not fixing the problems.”
“I cannot vote for this too small tax at a time when a larger tax would have a far, far greater benefit,” said Delegate Don Perdue (D-Wayne, 19).
Again and again, House Republicans asked why House Democrats did not propose a larger tax hike during the bill’s amendment stage on Monday.
“I am very, very, very grudgingly going to support this tax,” said Delegate Terry Waxman (R-Harrison, 48). “I want to remind everybody that we were sent here to find common sense solutions, to work together and to compromise to move this state forward.”
Republican Delegate Pat McGeehan (R-Hancock, 01) was an opponent of the proposal.
“I just can’t believe we’re having this debate. Republicans take control, supermajority here in the House, 64, a majority in the state Senate and we’re sitting here debating raising taxes,” McGeehan said.
West Virginia’s cigarette tax was last raised in 2003.
In addition to $76 million from the tobacco tax hikes, the proposed House budget, as it came out of the House Finance Committee on Monday, had included $65 million in spending cuts, $61 million from the Rainy Day Funds and $24 million in one-time monies.