State budget battle becomes even more complicated
By Chris Lawrence, WV MetroNews
CHARLESTON, W.Va. — The challenge of crafting the state budget for Fiscal Year 2017 continues behind closed doors in Charleston. However, those inside the budget talks between the House, Senate, and Tomblin administration indicate there may be work to do on the current state budget as well.
The state Tax Department is expected to announce soon the state is falling farther behind in projected revenue collections for the current fiscal year. Speaking on MetroNews “Talkline” Thursday, Del. Brent Boggs (D-Braxton) indicated that would make using the Rainy Day Fund to balance next year’s budget an even less attractive option.
“If we have to take a large amount of money out of the Rainy Day to complete the ’16 budget, then I believe taking another large sum of money out of Rainy Day for ’17 certainly doesn’t seem to be something they (the Tomblin administration) have a great deal of interest in,” Boggs said.
Gov. Earl Ray Tomblin, in his initial budget presented to the legislature, proposed raising the tax on cigarettes in West Virginia by 45-cents a pack. The state Senate pushed that up to $1 a pack. The House of Delegates rejected both increases.
There’s no appetite for any tax increase among many House Republicans. But there are now indications the Tomblin administration is advancing the idea of an increase in the consumer sales tax, as well as the tobacco tax.
One proposal from the Governor’s office would raise the consumer sales tax by one-half percent and the cigarette tax by $1 per pack. A second option would raise the consumer sales tax by a full percent and the cigarette tax by 45 cents.
“It’s apparent the 45 cents is not going to be sufficient so I think the dollar tobacco tax certainly has merit,” said Boggs. “But I think anything we do in a general sales tax realm–certainly I would favor something that is sunsetted after a specific period of time and wouldn’t just be there forever.”
“We’re in unique financial times,” said Boggs. “I don’t think now is the time to be into brinkmanship versus statesmanship. I think we’re going to have to make some tough choices just like the legislature did back in 1989.”
Historically, the 1989 legislature came together and passed a massive tax increase as their first act proposed by then newly elected Gov. Gaston Caperton. Some would say the state was in even worse shape in 1989 than today, but the positions are comparable.
“No one wants tax increases and certainly I think we need to keep anything we do to a minimum in raising revenues,” said Boggs. “But the numbers pretty much speak for themselves and we have cut repeatedly all across the board. I don’t think we want to get into cutting State Police detachments and higher ed has been hammered.”
There’s also a concern by Boggs and others the state may face a cut in its bond rating which would make borrowing money for future projects even more expensive. Boggs admitted the bond rating reduction seemed almost inevitable regardless of the direction the legislature takes. The downturn in coal and the presently depressed price of natural gas are added factors which could create a bond rating reduction on their own. Boggs believed the key would be how the state responded.
“How we handle this downturn–all of which is basically out of our control as a legislature and a state–how we respond with decisiveness and willingness to do what is necessary. I think there are some things we can do to mitigate or lessen the severity of what happens even if they do cut it,” Boggs said.
The current state budget expires June 30. So far there are no special sessions of the legislature scheduled to work on the budget.