Statehouse Beat: Tomblin handled budget deficit plans well

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Statehouse Beat: Tomblin handled budget deficit plans well
By Phil Kabler, Statehouse Reporter
Consensus from longtime Statehouse observers is that Gov. Earl Ray Tomblin did a masterful job of framing the debate on how to address the combined $820 million of funding deficits in the current and upcoming 2016–17 state budgets.
He rationally spelled out a plan that combines $250 million of spending cuts imposed over the past two years with some prudent tax increases that will balance the budget gaps, while allowing the state to continue to pay off sins of the past in terms of closing unfunded liabilities in workers’ compensation and state pension funds.

In a counterpoint to the legislative leadership’s calls for cutting taxes to make West Virginia more competitive with other states, Tomblin proposed raising a tax that is aberrantly low compared to most other states (tobacco), and enacting a tax that West Virginia lacks that most states already collect (sales tax on telecommunications).

Particularly good was linking the proposed increase in tobacco taxes to a plan that would largely offset proposed severe cuts in Public Employees Insurance Agency benefits — cuts that threaten to leave many state teachers and public employees one serious illness or injury away from financial ruin.

In doing so, Tomblin put the burden squarely on the Legislature to either enact the proposals, come up with viable alternatives, make an ill-advised raid on the state’s Rainy Day funds (which Tomblin would likely line-item veto anyway), or allow ideology and political rhetoric to plunge the state further into fiscal crisis.

The initial reaction from some legislative leaders was that they want to close the deficit by cutting spending, as opposed to imposing any tax increases.

To illustrate how ludicrous that is, outright elimination of all general revenue funding for the legislative and judicial branches, and for the entire departments of Administration, Commerce, Education and the Arts, Environment, Revenue, Veterans Assistance and Senior Services combined would not amount to $420 million a year.

It’s worth noting that legislative leaders commissioned a $500,000-plus audit of the Division of Highways, in the theory they could uncover massive waste and inefficiencies, and use that savings in lieu of major funding increases to address the state’s deteriorating roads.

In fact, the audit found potential savings of $25 million to $50 million a year (with some dubious conclusions). That’s not chicken feed, but it amounts to somewhere between 2 to 4 percent of the state’s current $1.25 billion annual spending for road maintenance and construction, and well short of the $750 million to $1.1 billion a year of additional funding the Blue Ribbon Commission on Highways concluded is needed to adequately maintain and build roads.

No one has a more thorough understanding of the state budget than Tomblin, and in this instance, he looks like a chess master playing against novices who aren’t quite sure which moves each piece can make.

• • • 

What the leadership lacks in experience, they make up in hubris, but the veiled threats to refuse to seat Daniel Hall’s successor in the Senate if the appointee is a Democrat takes the cake.

The West Virginia Constitution gives the Legislature authority to determine the qualifications of its members, but also sets down quite clearly conditions that would disqualify an individual from serving.

Those includes failure to be a resident of the district from which he or she was elected; holding other public office (state, county or federal); or conviction for bribery, perjury, or other “infamous crimes,” but nothing about being from the “wrong” political party.

Refusing to seat the appointee would also be a slap at the will of the voters in the 9th Senatorial District, who thought they had elected a Democrat in 2012.

If Senate leadership ultimately provokes a constitutional crisis, one couldn’t fault Senate Democrats for taking a page from history (1911, to be precise), and taking the train to Cincinnati to shut down the Senate until sanity can prevail.

• • • 

Speaking of hubris, Twitter lit up recently with an exchange between Berkeley County elementary schoolteacher Gina Pratt and Delegate Eric Householder, R-Berkeley, after she tweeted him, asking that he support putting additional funding into the PEIA to avoid the pending benefits cuts.

When he dismissed her proposal that the state increase the tobacco tax to fund PEIA, Pratt asked Householder where she was supposed to get the money to pay her higher health care expenses.

In a series of tweets, Householder alternately suggested that she: 1. teach summer school, 2. get a part-time job during the summer, or 3. cut expenses, adding, “What can you cut out? Internet?”

(I got a chuckle out of that last suggestion, since that would have avoided the Twitter exchange in the first place.)

Householder, whom I could not reach Friday, subsequently made his Twitter page private, but the screenshots of the exchange have been widely circulated on social media.

• • • 

Finally, several readers (smokers, I suspect) have asked why Tomblin proposed a tax increase on tobacco, but not on liquor or beer.

A short answer is that, as sources of state revenue, beer and liquor are small potatoes.

Liquor profits brought in $18.36 million in 2014–15 and are projected to raise $16.05 million this fiscal year. Beer taxes and licenses raised $7.77 million in 2014–15, an amount projected to grow to $8.2 million this fiscal year, reflecting growth in craft beer sales.

By comparison, tobacco taxes brought in $102.16 million in 2014–15, and should bring in $100.4 million this budget year.

Point is, Tomblin could have proposed doubling beer and liquor taxes and not been anywhere close to the $71.5 million that a 45-cent-a-pack increase on tobacco taxes can raise.