Delegates in the House Finance committee met Saturday afternoon to hear yet another budget proposal from Republican leadership. Earlier this month, House and Senate leaders released their budget framework, but not a budget bill.
Saturday’s presentation is not the final budget bill for the House either, but an overview of where the Finance Committee will recommend cutting government and increasing spending.
While Delegates did not see a budget bill Saturday, they were given a presentation with a general overview of the House’s budget plan. That plan is based on the governor’s general revenue estimate, which predicts the state will bring in just over $4 billion next fiscal year.
The House’s budget plan released Saturday spends $4.2 billion. It makes $45 million in cuts to government programs, fully funds Medicaid, and provides teachers with a 2 percent pay raise by refinancing the Teacher’s Retirement Debt. That refinancing frees up about $70 million in general revenue dollars each year for spending, but would cost the state an additional billion dollars to pay off the debt in the long term.
The House 2018 budget also relies on some tax increases to find a balance – largely found in House Bill 2933. The bill has been called a tax reform measure by Republican leaders. It would instate a sales tax on cell phones, daycare services, and some personal and professional services by October 1 of this year. It would also reinstate a 3 percent grocery tax by that time.
On Jan. 1 of next year, even more services would get roped into the tax under the bill, like gym memberships and music instruction. Then in July 2018, the sales tax would be lowered from the current 6 percent to 5 percent. In 2018, the bill brings in an additional $172 million from the newly taxable services and food tax, $29 million in 2019 when the rate lowers to 5 percent, and just $11 million extra in 2020 when fully implemented.
The bill will be on second reading in the House Monday, but over the weekend, several Democrats and members of the Republican Liberty Caucus attempted to kill the bill in a procedural move that ultimately failed. The attempt left some question about whether or not leadership can rely on the new tax revenue brought in by the bill.
“There are members on both sides of the aisle that will not like this final budget," said House Finance Chair Del. Eric Nelson, R-Kanawha, "but when times are tough, everybody has to take a little bit.”
Nelson says Saturday’s procedural move was quote, "politics," and he hopes his fellow members jump on board and support the plan leadership is putting forward.
“What we have in front of us right now are various tools," Nelson noted, "cause we had; it’s required to have all these bills out of committee, and so all our tools are on the table right now, and so should that go down, well then that will slow up the budget process, because all of a sudden, what is built into that as it relates to expenditures across agency lines; there could be some serious negative effects to that.”
Minority House Finance Chair Del. Brent Boggs, D-Braxton, says he’s very concerned about the Sales and Use Tax bill, because he thinks it will end up hurting low and middle income people.
Not only does it increase the number of items and services that are subject to the sales tax, it would also implement a 5.1 percent across the board personal income tax, resulting for a tax hike for people who make less than $84,000 per year and a tax break for those above that income level, according to some estimates.
“They have put the burden in some cases on the people who may be the least able to pay and giving a substantial break for those that certainly have the ability to pay, and in addition to that, the base broadening bill takes in so many different areas of concern to many people. I think we need to flesh that out a little bit further and find out how that’s going to impact the bottom line of low income and middle class folks.”
Boggs also says he was disappointed members in his committee didn’t see a full budget bill on Saturday, but instead an expansion on a framework.
“When you get a generic overview of the budget, it doesn’t tell you the small details," Boggs said, "and for a lot of programs, for a lot of agencies, for a lot of boards and commissions, and people that depend on a lot of services, those details mean the difference between us meeting their needs and not being able too.”
The House’s budget plan also eliminates the Department of Education & the Arts — reorganizing its agencies under other departments.
The Educational Broadcasting Authority, which is West Virginia Public Broadcasting, would be moved to the Department of Education as an independent agency and receive a $1 million cut, nearly a quarter of its state funding.
House leadership hopes to present a budget bill to the committee early this week.