Budget Deficit Story Archives - West Virginia Public Broadcasting

Bills On Control Of Legislative Auditor, Minorities Purchasing Car Dealerships, Head To Governor

On third reading in the House of Delegates Thursday, there was a long debate over minorities purchasing car dealerships and a separate debate on control of the Legislative Auditor’s office. Other bills and resolutions included smoking in the car with a child, and taking action over a massive federal deficit.

Senate Bill 173

Senate Bill 173 modifies guidelines for motor vehicle dealers, distributors, wholesalers, and manufacturers. The lengthy bill covers numerous automotive sales industry guidelines. The bill failed last session.

Debate on the bill focused on a car manufacturer’s right of first refusal. This is a clause in a contract that gives a prioritized, interested party the right to make the first offer on purchasing a West Virginia car dealership before the manufacturer can negotiate with other prospective buyers.

Del. Mike Pushkin, D-Kanawha, proposed an amendment enhancing opportunities for qualified persons who are part of a group who have historically been underrepresented in buying car dealerships. He referred to an industry lobbyist testifying in committee.

“The intent of this bill was to preserve a good old boy system,” Pushkin said. “The intent of this bill was to keep the manufacturer from selling to minority owners. And then the question was like, do you mean less than 50 percent? No, minority as in racial minority, or women. So I don’t think that’s what the intent of this bill should be. So let’s prove what the real intent is.

The amendment was rejected.

Del. Daniel Linville, R-Cabell, said the proposal sets a level playing field in the competitive and lucrative auto dealer industry.

“To set a level playing field for all of the interactions between some of the very largest organizations that are publicly traded entities, the manufacturers of these automobiles, and their local dealers,” Linville said. “Frankly, I think that we stand for free markets, I think that, as has been said, you should be able to sell your business, to whom you wish, without the ability for that to come in and be assigned and placed somewhere else.”

Senate Bill 173 passed 87-13.

Senate Bill 687

Investigating possible wrongdoing or mismanagement within state agencies and departments is the job of the Legislative Auditor’s office. Senate Bill 687 would clarify the Legislative Auditor’s scope of authority. The bill would have the auditor responsible to the Joint Committee on Government and Finance; and that the auditor may exercise powers at the direction of the Senate President or Speaker of the House of Delegates.

A sustained litany from those opposed to the bill, including Del. Larry Rowe, D-Kanawha, noted a lack of investigative independence and transparency with the revised scope of authority.

“We want somebody that we can trust to tell us the truth,” Rowe said, “And we want that truth to be made public and fair.” This bill is a takeover of the legislative auditor’s office. It’s eliminating the independent, professional decision making and investigations that they perform. There is no complaint about the service that they have performed.”

But Del. Adam Burkhammer, R-Lewis, said investigating and auditing will be enhanced by this bill.

“There’s been some conversation about whether this should be an independent auditor,” Burkhammer said. “I would completely disagree with that notion. Because the very idea of the Legislative Auditor is to work for this body. He’s appointed by the committee to serve at its will and pleasure. That committee is the Joint Committee on Government and Finance, appointed by that committee, to work for its will and pleasure to serve this body, so that we can make sound policy decisions in the direction that we want the state to go.”

Senate Bill 687, the Legislative Auditor bill, passed with a 56 to 41 vote and goes to the governor’s desk.

Other House Action

In committee and on the Senate floor, debate over Senate Bill 378, prohibiting smoking in a vehicle when minors 16 or under is present, centered on health versus freedom. In the House, there was no debate as the bill passed by a 66-33 margin, and went to the governor’s desk.

A charge for lawmakers in West Virginia and in Washington D.C. to take action on a multi-trillion dollar federal deficit is at the root of House Concurrent Resolution 57. It demands that Congress call a Convention of States to propose amendments to the U.S. Constitution to create federal fiscal responsibility

Del. Bill Ridenour, R-Jefferson, is a sponsor of the resolution. He said this is not a duplicate of a 2022 resolution, but a call for congressional action to not have the state and nation fall into a fiscal abyss.

“Every 90 days, we’re adding a trillion dollars in debt to the US debt,” Ridenhour said. We’re on the edge of a fiscal abyss. And we’ve got to do something, we as a nation have to do something. But we in this body have to do something as well. We have a responsibility, under federalism, to act with the federal government with the states to try and take action that will have some impact on where we’re going as a nation.”

Countering concerns on the issue were of a possibly open-ended convention that might get away from the fiscal point, the resolution was adopted with a 79-18 vote.

Senate Bill 170 deals with workers compensation health care coverage. It establishes a rebuttable presumption of injury for certain covered firefighters that develop bladder cancer, mesothelioma and testicular cancer. The bill passed 99-0 and goes to the governor’s desk.

Justice Calls WVU Curriculum Bloated, Rejects State Bailout

Justice said he did not sense a call for WVU funding help from House or Senate leadership.

With a $1.8 billion state surplus, some legislators in north central West Virginia are asking the state to help West Virginia University out of its $45 million dollar deficit and resulting academic transformation.

Asked in a Wednesday media briefing about providing emergency financial help for its flagship university, Gov. Jim Justice said he questioned the school’s overall academic offerings.

“There is absolutely no question that what has happened is some level of bloating in programs and things that maybe we ought not be teaching at WVU,” Justice said.

Justice also said he did not sense an urgent call for WVU funding help from the state House or Senate.

“I do not think there is an appetite from the standpoint of the leadership in the legislature at this point in time to basically bail out WVU,” he said.

Justice said giving WVU “one-time-money” would offer limited help and the state needs to be in a backfill situation. He said he has faith in WVU leadership.

“I have all the confidence in the world and President Gee and the Board of Governors that WVU will get their house in order,” Justice said.

A majority of the WVU Board of Governors are appointed by the governor. They will meet Friday to make a final determination on an academic transformation plan.

House Changes Sales Tax, Cuts Higher Ed in 2018 Budget

Members in the House of Delegates have approved their budget bill for fiscal year 2018 – bringing $140 million additional dollars in revenue and making $75 million in cuts to government agencies. The House’s budget is largely based on revenue brought in under a Senate bill that was drastically changed by the chamber’s finance committee.

That bill, Senate Bill 484, originally would have just captured some $12 million a year that goes into the state Road Fund, but while it still contains the provision, it’s been transformed into what House leadership is calling a tax reform measure. The House’s version looks to broaden the base of taxable goods and services in two phases, July and then October of this year. Under the plan, things like cell phones or personal services would become subject to the sales tax, bringing in some $140 million in additional revenue in the 2018 budget.

Del. Daryl Cowles, R-Morgan, House Majority Leader.

The bill would also require that by July 2018, the state’s current 6 percent sales tax would be reduced to 5.5 percent, then to 5.25 percent in July 2019. Over time, if the fiscal climate is favorable in the state, the tax rate could go down to as low as 4.75 percent. That reduction of the overall rate will also lead to deficits in the state budget, that is if spending doesn’t increase in the state.

Majority Leader Daryl Cowles of Morgan County adamantly supports the measure, saying West Virginia’s border counties will see a boom in revenue.

“It’s tax relief for the people of West Virginia,” Cowles said, “It does capture revenue in the short-term, it is very quickly, within two short years, revenue neutral as the rate is lowered for everyone on every purchase, point of sale that’s taxed. And then, for another two years, the rate drops all the way down to 4.75. Imagine that. Imagine the growth our border counties could see if we have a competitive advantage at a tax rate of 4.75 considerably lower than all of our surrounding neighbors.”

But Minority Finance Chair Delegate Brent Boggs, of Braxton County, says he’s concerned this revenue idea lacks fairness.

“It seems like with this, when we’re talking about broadening the base, we’re really not broadening much, because it’s all the things that we’re not picking up, and we seem to be disproportionately hitting the people that are at the low income and middle income level, and possibly that takes in a lot of our seniors,” Boggs said.

After nearly two hours of debate, Senate Bill 484 passed 52 to 48.

Del. Brent Boggs, D-Braxton, House Minority Finance Chair.

House Budget

In an evening floor session Wednesday, delegates also took up the chamber’s budget bill, House Bill 2018, which relies on $75 million in cuts to state agencies to balance the budget. The House’s budget no longer includes the 2 percent pay raise to classroom teachers first proposed by Gov. Jim Justice. It reduces funding for West Virginia four-year higher education institutions by 6 percent and the state’s community and technical colleges by 5 percent.

The budget also grants the Higher Education Policy Commission the authority to decide how the state’s higher education dollars will be divided between institutions.

It was this part of the budget that had some delegates in the House concerned. Several Democrats argued the provision is unconstitutional, including Delegate Rodney Miller, a Democrat from Boone County, who says the House had even considered getting rid of the organization at one point.

“It’s interesting that we are giving them the pot of money to let them be the arbitrator, the disseminator of this funding; letting them be the ultimate choice when at the same time,” Miller said, “during this legislative session, we had, if I’m not mistaken, we had some legislation proposed to actually either get rid of or completely alter, significantly change the CTCs and HEPCs in our state. Now we’re going to give them all this power and authority and money. It’s very confusing with the consistency of what we have going on in this body.”

Democrat Mike Caputo, of Marion County, says allowing the HEPC to control higher education spending will result in a lack of accountability.

“These folks, they’re appointed for a certain term. They don’t have to account to the people; they don’t put their name on the ballot. We put our name on the ballot. And that bothers me,” Caputo explained. “I don’t know who come up with this crazy idea to throw all the money in one pot and just let some people toss it out how they feel without any accountability. Mr. Chairman, with all due respect, that to me is just absolutely irresponsible.”

Republican Delegate Mark Zatezalo, of Hancock County, spoke in support of the budget bill, and suggested the HEPC work more closely with the state’s colleges and universities than the Legislature does.

“We are allocating resources to two groups who have the most interface with higher education, and I’m wondering if they might have more insight into how things are spent at the higher education level than we do,” Zatezalo noted. “I certainly, you know, I can see money go in and out of here, and I can see money allocated for schools; frankly I’m not in the weeds enough for each school to understand exactly what they need and exactly who needs the money.”

House Finance Chair Eric Nelson argued this was a tough budget year all around, but when it came to giving the HEPC the authority, it makes the most sense.

“I mentioned we had a bunch of agencies come before us to give budget presentations. The presentation for Higher Ed and CTC was made by HEPC and the CTC chancellors,” Nelson said. “It was not the individual colleges. You know what, we had very tough choices, and we’ve been in some unchartered territory. It’s been a balancing act. This balance is structurally sound; difficult decisions had to be made. Without a doubt, this has been an all-inclusive and a very transparent process.”

The House’s budget bill passed on a vote of 58 to 42.

House Votes to End Greyhound Breeding Fund

The House of Delegates has passed a bill that would effectively put an end to greyhound racing in the state, according to its opponents. Senate Bill 437 discontinues the Greyhound Breeding and Development Fund, putting about $14 million back into excess lottery revenue accounts for lawmakers to appropriate in the upcoming fiscal year. The bill was approved last week in the Senate on a 19 to 15 vote.

The fund was created by the state Legislature in 1994 and helps support greyhound racing at the state’s two racetrack casinos in Wheeling and Nitro. It’s made up of a small percentage of the money bet at table and video lottery games at those locations and helps pay breeders as well as the winnings on races.

Greyhound officials have said eliminating the fund would cut 1700 jobs in the industry.

Several delegates – mostly Democrats – spoke against the bill during a Saturday floor session, like Joe Canestraro, of Marshall County.

“All this body has done has voted to cut low hanging fruit,” Canestraro said, “Low hanging fruit under the illusion that we’re right sizing government. No, what we’re doing is we’re taking jobs and revenue from each of our districts is what we’ve done.”

Delegate Erikka Storch, of Ohio County, was the only Republican member of the body to speak in opposition to the bill. She says the entire state reaps the benefits of greyhound racing.

“All of your districts get money from the racing casinos and the Greenbrier,” Storch said, “I would imagine if you speak to your mayors and commissioners, they will tell you about their uses for this money. Based on a study in Iowa, a year after they eliminated greyhound racing, their figures dropped 20 percent. Every district in the state will feel this.”

Delegate Shawn Fluharty, a Democrat from Ohio County, pointed out the secondary jobs that cutting the greyhound fund could impact.

Del. Eric Nelson, R-Kanawha, House Finance Chair.

“Sarah’s Kennel’s in Wheeling; they spend $5,000 a week on food and vitamins for the greyhounds,” Fluharty noted, “Now, where do they purchase that? Tristate Kennel Supply in Brooke County. They purchase vehicles; a typical kennel truck costs $60,000. Sarah’s Kennel’s owns ten of them. Where do they purchase them? Robinson Chevrolet in Wheeling, and then driving those kennel trucks, who drives them? Employees. Up and down Route 2. How much do they pay a week in just fuel? They average around $300 a week in just fuel. How many small businesses will be impacted?”

Only four delegates spoke in support of the bill, including House Finance Chair Eric Nelson who says the industry is dying in the state and it’s time for lawmakers to make tough budgetary decisions.

“At the end of the day, we’ve got to have; we ask the question of priority, and this happens to be a priority where we use a certain amount of state dollars to support a purse fund,” Nelson explained, “so the priority is, do we use this amount of money to support purses? Or do we look at our higher education and have an effect on that? Do we look at some of our health programs? The alternatives are some serious cuts to other areas that will also have serious effects on many, many citizens of West Virginia. Mr. Speaker, there’s no easy decisions with this budget.”

Senate Bill 437 passed 56 to 44 and now heads back to the Senate before moving on to Governor Jim Justice for a signature.

House Kills Bill to Increase Beer Barrel Tax & More

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.

Tomblin Says West Virginia's Budget Problems Could be Worse

Gov. Earl Ray Tomblin says West Virginia’s budget shortfall seems daunting, but the financial situation isn’t nearly as bad as it has been in the past.

Tomblin tells The Register Herald that the $353 million shortfall is troubling. But he says the state isn’t “nearly in the kind of shape it was the ’80s” when he lead the Senate Finance Committee.

Tomblin said there were times when finances were so bad that workers came to cut the gas off at the governor’s mansion because the bill wasn’t paid.

Tomblin says he’ll lay out a plan this week that aims to ensure the state stays on track financially this year. He says his proposal will help West Virginia recover from its financial woes in the next couple of years.