House Kills Bill to Increase Beer Barrel Tax & More

Mar 28, 2017

The West Virginia House of Delegates has killed a bill that leadership says was one of the keys to balancing the 2018 budget. The bill was presented on behalf of Governor Jim Justice and originally would have raised $450 million in new taxes but drastically changed as it worked through the committee process.

House Bill 2816 would have put about $20 million dollars back into the general revenue fund during the 2018 fiscal year. The governor’s office says the budget hole for 2018 could be as high as $497 million dollars. But House officials say that’s because the governor attempted to increase state spending in his budget plan. The House’s budget calls on closing about a $340 million dollar gap, and without House Bill 2816, the chamber’s Finance Chair says that will be more difficult to do.

The bill looked at three major things to help balance the 2018 budget. First, it would’ve eliminated the film tax credit, putting $5 million back into general revenue. Second, it would’ve ended a transfer of monies from sales taxes on automobile products to the state road fund, putting about $12 million back into general revenue. And third, it would’ve increased the beer barrel tax, which estimated to bring in almost $3 million additional dollars.

This bill was up for passage in the chamber Tuesday, but was immediately met with opposition from members on both sides of the aisle. Several Democrats and Republicans opposed the bill because of its elimination of the film tax credit. But it was the beer barrel tax increase that had delegates like Republican Pat McGeehan from Hancock County fuming.

“So I’d just like to know, are we conservatives here? I thought the Republicans controlled this chamber. Maybe not, I don’t know," McGeehan said, "Some members in my party seem like they’d like to take us back to the 1920s and early 1930s as prohibitionists. It’s not our job to pick and choose which legal products to tax. That’s called the ‘nanny state.’ It’s called free enterprise; that’s what we’re supposed to embrace.”

The bill failed 39 to 60. House Finance Chair Delegate Eric Nelson of Kanawha County says he was extremely surprised by the vote.

“You know what, we’re just going to continue – our idea of having a budget out by [Wednesday], which we were on a path of last Saturday; it’s going to be very difficult now," Nelson noted, "So, you either have to look at cuts, or I hate to say it, revenue measures, and I don’t think the body, if they don’t look at a potential beer consumption change, where do you think they’ll be? Difficult times right now.”

Originally, delegates were also going to vote on House Bill 2933 Tuesday. It’s another bill to increase revenues for the state.

The bill in its current form reinstates a 3 percent food tax in October 2017, and it would also get rid of a number of exemptions to the current sales tax -- like cell phones and professional services.

It would lower the sales tax from 6 to 5 percent in July 2018, and it would put a flat 5.1 percent rate on the personal income tax. All in all, the bill is estimated to bring in an additional $215 million between 2018 and 2020.

Delegates pushed consideration of that bill off until Wednesday.