Members of the House Finance Committee are expected to get their first look at the chamber’s budget for the 2018 fiscal year in a meeting this Saturday. In order to balance it, lawmakers will have to close an estimated $497 million hole.
To close the gap, Republican legislative leaders are largely looking to cut state spending, specifically in public education, higher education, and Medicaid, but on Friday, House Finance Committee members considered some new revenue increasing measures, or tax increases.
The House Finance Committee considered a committee substitute for House Bill 2816.
The bill would eliminate the West Virginia film tax credit – an annual $5 million cap awarded by the West Virginia Film Office to attract movie producers to the state. That elimination is one Democrat Jason Barrett, of Berkeley County, opposes.
Barrett says Berkeley and Jefferson Counties have hosted several Discovery Channel and National Geographic film shoots in recent years.
“This film tax credit brings people to the state of West Virginia; people who have never been here before, and probably wouldn’t come," Barrett explained, "This brings them into our state; it allows them to see the beauty of West Virginia, not only in the Eastern Panhandle but the entire state.”
But the bill does a lot more more than just eliminate the tax credit. It also ends a transfer of some $12 million from the general revenue fund to the state’s road fund. That money comes from purchases of automobile parts and other items. Capturing the transfer and keeping it in general revenue will help balance the state’s budget.
The committee bill also includes provisions to increase the beer barrel tax, which is estimated to create an additional $3 million for the state.
The revenue aspect of the bill has changed quite a bit, though, since it was first introduced to the chamber on behalf of Gov. Jim Justice. It originally included an increase to the state’s sales tax and a new tax on businesses resulting in $400 million in new revenue. In total, the committee’s changes create only $15 million in increased revenue.
Minority House Finance Chair Delegate Brent Boggs spoke in opposition to the bill.
“I appreciate what little revenue it raises, but that’s the problem, it raises little revenue at a time that we need substantially more," Boggs said, "and while no bill is perfect, and I’m sure no bill ever will be; this one falls way short of what I believe many of our needs are going to be, and it’s only a fraction of what was included in the governor’s original bill.”
Vice-Chair Delegate Eric Householder of Berkeley County spoke in favor of the bill.
“Under the original concept, if we were voting on the original concept, keep in mind, we would have a higher state sales tax, we would have $400 million in new taxes; more strain on an already existing economy that we’re seeing with our businesses that are having financial problems," Householder said, "and I think for the most part, ladies and gentleman, this is a great compromise; it’s a better bill, and for those reasons, I support it.”
The bill passed on a roll call vote of 15 to 9, and will now be considered by the full House.
There was another tax-related bill that moved in the House Friday. That bill is 2933, which expands the base of the current sales tax and lowers the overall rate to generate additional tax revenues.
Republican Delegate Riley Moore, of Jefferson County, is the lead sponsor. His bill would reduce the sales tax to 5.5 percent from the current 6 percent by January 1, 2018. It also ends current exemptions in the state sales tax on things like cell phones, personal and professional services, contracting services, mobile homes, and daycare services.
According to the bill's fiscal note, the bill would bring in $105.6 million during fiscal year 2018, largely from the telecommunications and service taxes.
Moore says his bill would require businesses and residents who aren’t currently paying taxes to start paying, which he says will make the state’s tax system fairer and more competitive, especially in border counties.
“I think this is the best way to try to be able to do that, to be able to grow our economy," Moore noted, "and also, especially for me, I’m from Jefferson County, our sales tax is quite a bit higher than our neighboring counties in Virginia, in particular. We have a lot of our folks go shopping over there, and we’re trying to keep some of that tax money here in the state.”
Moore says he think his bill will set a good foundation for West Virginia’s economy moving forward.