Eastern Panhandle lawmakers met for a Legislative Wrap-Up panel in Martinsburg Thursday, and figuring out the 2018 state budget was at the forefront of lawmakers’ minds.
Eastern Panhandle lawmakers pointed out several accomplishments from this year’s legislative session during Thursday’s Berkeley County Chamber of Commerce wrap-up panel. Accomplishments like legislation to fight the state’s drug epidemic and one to increase broadband access.
But a $500 million budget gap still looms. House Majority Leader Daryl Cowles, of Morgan County, says despite all the back-and-forth on the budget, he feels a budget deal is within reach.
“I’m optimistic actually,” Cowles said, “I think the opportunity is ripening for real compromise and discussion on solving this budget crisis, this year and for the future years is upon us, and I’m optimistic.”
Governor Jim Justice announced Wednesday evening he would call back the West Virginia Legislature on May 4 for a special budget session. Lawmakers have until June 30 to pass a balanced budget, or the state faces a government shutdown.
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.
Credit Perry Bennett / West Virginia Legislative Photography
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West Virginia Legislative Photography
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.
Credit Perry Bennett / West Virginia Legislative Photography
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West Virginia Legislative Photography
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.”
Credit Perry Bennett / West Virginia Legislative Photography
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West Virginia Legislative Photography
Del. Mike Caputo, D-Marion.
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.”
Credit Perry Bennett / West Virginia Legislative Photography
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West Virginia Legislative Photography
Del. Mark Zatezalo, R-Hancock.
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.
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.
Credit Perry Bennett / West Virginia Legislative Photography
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West Virginia Legislative Photography
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.
A bill to eliminate the West Virginia Greyhound Breeding Development Fund is making its way through the House. It’s been on second reading, or the amendment stage, since Tuesday, but due to a laundry list of amendments and some heated debate, consideration was postponed until Thursday.
Senate Bill 437 eliminates the Greyhound Breeding and Development Fund, putting some $14 million back into the state’s Excess Lottery Revenue Fund to be used for appropriations by the legislature. The fund is made up of a percentage of the money from table games at the state’s two greyhound racetrack casinos in Wheeling and Nitro. The appropriations help pay for dog breeding as well as bet winnings.
The House considered one amendment to the bill Thursday, which came from Delegate Jeff Eldridge, a Democrat from Lincoln County. Rather than getting rid of the fund altogether, his amendment would instead look to another funding source to help support the state’s budget crisis – horse racing.
His amendment would take half of the money from the greyhound breeding fund and the other half from a similar fund set up for the horse racing industry. Eldridge says by doing this, it’ll keep the greyhound industry alive in the state and save some of his constituents’ jobs.
“There’s some discrepancy a’how many jobs this is, well if it’s one job in my district, I’m gonna stand up and fight for it,” Eldridge said, “and if I could offer 50 more bad amendments to this thing, I would. Everybody gets up here and stands for their district and what they stand for. If we can’t band together as a group of people to fight for your district, then we’re here for the wrong reasons.”
Officials from the greyhound racing industry estimate eliminating the fund would cost nearly 1,700 jobs in West Virginia.
House Finance Chair Delegate Eric Nelson says he understands Eldridge’s concerns, but he says the industry is dwindling and the state needs the money. He spoke against the amendment.
“Twenty years ago, the racing industry for our greyhounds, and really thoroughbreds, was thriving much greater than it is now, but over these last few years especially, there’s been a tremendous decline,” Nelson said, “and I think I stated the other day that just in Wheeling alone, how the participation at the track, as far as people attending, has gone from 900,000 twenty years ago down to less than 20 last year, or maybe it was 2013 according to study. I mean it’s very difficult times, and it’s the prioritization.”
The amendment failed on a roll call vote of 39 to 57. Senate Bill 437 will be on third reading and up for a final vote in the chamber tomorrow.
The West Virginia House of Delegates has killed another revenue increasing bill – one that would’ve generated an estimated $215 million in three years.
House Bill 2933 has taken several forms as it worked its way through the House of Delegates. In its latest form that was set for a vote Wednesday, the bill would’ve reinstated a 3 percent food tax in October of this year and eliminated a number of exemptions to the current sales tax – things like daycare services, cell phones, or personal and professional services.
It would’ve lowered the sales tax from 6 to 5 percent in July 2018, and it would’ve put a flat 5.1 percent rate on the personal income tax.
Several delegates swore on the campaign trail they would not support any revenue increases, and some members even tried killing the bill on its first reading in the chamber Saturday. By the time the bill reached second reading Monday, it had over a dozen pending amendments.
Consideration of any of those amendments and the bill itself were delayed multiple times before it was ultimately laid over Wednesday night. Wednesday, however, was crossover day, or the final day members can vote on bills originating in their chamber. That procedural move kills the bill and prevents lawmakers from putting it to a vote.
A similar tax reform measure, however, passed out of the State Senate Wednesday. That bill increases the sales tax, creates a new structure for the personal income tax, and lowers the severance tax on coal.
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.
