House may have votes to pass cigarette tax; Cole, Armstead want special session call additions

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House may have votes to pass cigarette tax; Cole, Armstead want special session call additions
By Shauna Johnson, WV MetroNews

CHARLESTON, W.Va. — A tobacco tax increase bill proposed by Governor Earl Ray Tomblin to generate anywhere from $71 million to $76 million in new revenues will be taken up directly on the floor of the House of Delegates after it comes out of the Senate.

Senate passage was expected as early as Wednesday at the State Capitol on what was the third day of a Special Session.

“To help expedite the process, I don’t believe that that needs to come back up and be rehashed in the (House) Finance Committee and take an extra day,” said House Finance Committee Chair Eric Nelson (R-Kanawha, 35) who predicted there would be enough votes in the House to pass the proposal.

“As chair of finance, I will support that,” Nelson pledged.

As of Wednesday morning, the bill still included Tomblin’s 45-cent per pack increase to the existing 55-cent tax on cigarettes along with corresponding increases to taxes on other products.

On Tuesday, members of the Senate Finance Committee amended the bill to include a 12 percent excise tax on the liquid used in e-cigarettes and the dedication of $43 million of the total newly generated revenues to the Public Employees Insurance Agency.

Nelson could not cite a specific path to passage in the House where a $1 per pack tax hike for cigarettes hit a wall during the 2016 Regular Legislative Session.

“There are a lot of moving parts with this whole budget closing gap measure right now,” he said of what will likely be a three-pronged approach to addressing a projected $270 million shortfall in the 2017 budget with (1) spending cuts, (2) additional revenues via tobacco tax increases and (3) one-time monies, either from the expiration of special accounts or withdrawals from the Rainy Day Fund.

Thus far, Governor Earl Ray Tomblin has resisted proposals to allow Rainy Day Fund dips to get into the the triple digits, following a year that has seen West Virginia officials turn to it multiple times to prop up the current budget with its own $111 million hole.

Senate President Bill Cole (R-Mercer, 06), a Republican gubernatorial candidate, said he understood Tomblin’s attempts to protect West Virginia’s savings, totaling more than $800 million.

“But it’s raining outside. We’re going to have to go there in order to get this one done,” Cole argued. “Then for the governor next year walking in the door, you can’t just snap your fingers and say, ‘Okay, here’s a new blueprint for state government.’ It will take time to put those changes in place and then to have them actually take effect.”

On Tuesday, Cole and House Speaker Tim Armstead (R-Kanawha, 40) sent a letter to Tomblin asking that the Special Session call be expanded to include some, if not all, of the following measures that would, in their view, facilitate budget work:

– Legislation ending discretionary transfers to the Licensed Racetrack Modernization Fund (HB 4271)

– Legislation decreasing the distribution to the West Virginia Infrastructure Fund by approximately $10 million

– Legislation eliminating the Secretary of Education and the Arts, totaling $851,753 in personal services and employee benefits

– Legislation revising the School Aid Formula through the elimination of the Growth County Facilities Act (SB 452)

– Legislation defunding the West Virginia Greyhound Breeding Development Fund (SB 641, HB 4625)

– Two additional supplemental appropriation bills allowing for certain special revenue funds to be expired to the surplus balance of general revenue, and the subsequent appropriation of such funds thereafter, or alternatively an additional supplemental appropriation bill to expire certain special revenue funds to the Revenue Shortfall Reserve Fund

– A Department of Environmental Protection rules bundle lost in waning hours of 2016 Regular Legislative Session

– Money Laundering Bill (HB 4575) which was lost on session’s last night “due to clerical error”

“While we can understand your hesitancy to re-introduce HB 4271 and SB 452, which were to your credit introduced by request of the Executive during the regular session, we believe that circumstances have changed enough since then that the pieces of legislation merit further consideration,” Cole and Armstead wrote.

The two continued, “We also think that there is sufficient interest in the measures listed above — more so than a one percent consumer sales tax or elimination of the telecommunications tax credit — that we should consider such measures during the ongoing budget process.”

Gov. Tomblin answered the legislative leaders in a letter dated Wednesday. He said he would consider their requests “only if they are part of a comprehensive, realistic solution to the state’s budget situation.”

Both Cole and Nelson were guests on Wednesday’s MetroNews “Talkline” ahead of floor sessions in the Senate and House. As of Wednesday, there is no end date for the Special Session which Cole predicted could continue into next week.

“If we get our job done in the Senate, I don’t have a problem recessing the Senate and letting the House go at it awhile,” Cole said.

Nelson said he was hopeful the Special Session could wrap up by the middle of next week, before the Memorial Day Weekend, “if everything falls into place.”

The new budget year in West Virginia begins on July 1.