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House Reveals 2018 Budget Plan

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.”

House Finance Vice-Chair Del. Eric Householder, R-Berkeley (left) speaking with House Finance Chair Del. Eric Nelson, R-Kanawha (right) in committee.

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.

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

“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.

House Votes to End Casino Upgrade Fund

The House of Delegates passed a bill that would end the Racetrack Modernization Fund three years early.

The fund was created by the Legislature in 2011 to provide matching dollars for the state’s four racetrack casinos to upgrade video lottery and other digital games.

According to the casinos, the fund allows them to keep up with competition from other states. For every $2 the casino spends, the state matches the facility $1.

When it was created, the fund received $10 million annually that could roll over year-to-year, but was decreased in recent years. It currently contains $7.5 million.

According to the bill, any upgrades that were planned by March 1, 2017, will still receive funding, but the rest of the money will return to the state’s general revenue fund.

Several delegates who represent the Eastern and Northern Panhandles expressed opposition to the bill – where three of the four casinos reside.

The bill passed on a close vote of 50 to 46, with four members not voting.

House Moves to End the Racetrack Modernization Fund

As lawmakers try to find ways to deal with the state’s financial problems, the House Finance Committee discussed a bill that could put $9 million back in the budget. The bill originating in the House’s Finance Committee would end the Racetrack Modernization Fund.

The fund was created in 2011 to supplement the cost of upgrading video lottery terminals – or digital slot machines and other lottery games. There are four racetrack casinos in the state – Mardi Gras in Cross Lanes, Mountaineer in Chester, Wheeling Island in Wheeling, and Hollywood in Charles Town.

Three of those casinos are in border areas and bring in out-of-state gamblers who contribute to West Virginia’s overall income. But in the mid-2000s, surrounding states began building casinos of their own. The fund was seen as a way to keep West Virginia’s gaming facilities more competitive.

Each year, lawmakers set aside $9 million in the Racetrack Modernization Fund for the upgrades, and any unused money rolls over from year-to-year. Currently, there’s $7.5 million leftover from last year. But the fund itself is only supposed to last until 2020. The House Finance Committee’s bill would end the fund three years early and re-appropriate the money to general revenue.

Some delegates in the Northern and Eastern Panhandles, however, had concerns about ending the fund, including Democratic Delegate Jason Barrett, of Berkeley County, who questioned Louis Southworth, an attorney representing the West Virginia Racing Association

“What kind of decrease in revenue have these casinos seen with this increased competition?” Barrett asked.

“I believe that in some of the years the racetracks were contributing around $450 million to the state,” Southworth said, “Last year, it was $367 million, so there’s been a decline, but at least the tracks feel that the fund has helped them keep that level up, and it would’ve been a lot worse if they hadn’t had it.”

“Would you agree that a lot of the players at these casinos are from out of state and having up-to-date games on these slot machines are critical to bringing those people in?” Barrett asked.

“No question,” Southworth answered, “It’s probably 80 to 90 percent from out-of-state, and the competition is fierce.”

Republican Delegate Erikka Storch, of Ohio County, also opposed the bill. She says the casino in her area is a huge contributor to her community, and losing the fund could make them less viable.

“If the racetrack doesn’t have the ability of that capital to upgrade their machines, will they have to lay off people? Will they have to, you know, direct their resources in other ways to maintain a competitive advantage? Will they be able to be a good player in the community as they have been? You know, they support a lot of nonprofits, they host a lot of things, they’re a major donor to a lot of things; they give back to the community a lot,” Storch explained, “Will they be able to do that? Or will they have to redirect those funds toward their capital necessities?”

Storch says she and some of her colleagues may consider offering an amendment on the floor.

House Finance Chair Eric Nelson, of Kanawha County, says he’s sympathetic to his colleagues’ concerns, but points out it’s additional revenue that can help balance the state’s budget deficit.

“I’ve got a casino, or gaming facility right in my backyard; fully aware of that,” Nelson said, “It is one of the balancing acts, you know. The priority of giving certain people or industries tax credits versus balancing the budget and doing other things like cuts and other revenue measures.”

The House Finance Committee did vote to move the bill to the full House, but on a close roll call vote of 14 to 11.

House Eliminates the W.Va. Courtesy Patrol

The West Virginia Courtesy Patrol is a state funded roadside assistance service. But as members in the House continue to look for places to cut to balance the 2018 budget, delegates have set their sights on the program’s $5 million budget.

The courtesy patrol has been around for almost 20 years. It’s a non-profit of the Citizens Conservation Corp through a contract with the West Virginia Division of Highways.To-date, the patrol has received over 3 million calls and employs nearly 100 people.

House Bill 2007 eliminates the patrol programs and transfers its funding to the State Road Fund.

Although the patrol travels roadways across West Virginia, it’s headquartered in Democratic Delegate Ed Evans’ district. He spoke in opposition to the bill and argues he didn’t get elected to get rid of jobs.

“Mr. Speaker, job creation, job retention, and earning potential is what we should be about. This [bill] is gonna kill 90 jobs. 90. That’s drivers; that’s the people that actually do the repair work; change those tires for you on the side of the road, whatever it might be,” Evans said.

But not everyone agreed with Evans, like Delegate Danny Hamrick, a Republican from Harrison County, who says the private sector can provide the same service.

“Just noting, looking at my car insurance bill, I note that I pay approximately $3 a month to have a roadside assistance survey, er service provided to do the same things, so it is available through many different avenues to the citizens of our state,” Hamrick said.

House Bill 2007 passed on a close vote, 58 to 41 and now goes to the Senate for consideration.

W.Va. Dept. of Commerce Requests More State Dollars

The West Virginia Department of Commerce gave the House and Senate Finance committees a presentation Monday morning to explore the state’s competitiveness in attracting businesses.

The Commerce department also asked for a significant increase in its funding. However, that request collided with the reality of the state’s dire budget situation.

The Joint Standing Committee on Finance met in the House Chamber for the Department of Commerce’s informational meeting. The presentation was part of Governor Jim Justice’s Save Our State plan to bring more business and jobs to West Virginia.

The presentation explored ways the state could improve its competitive standing by enhancing infrastructure, building up a stronger workforce, and identifying good site building locations. Presenters also said that so-called Right-to-Work legislation has been a positive factor in attracting some businesses to the state.

But the state’s Right-to-Work legislation has not been fully implemented in West Virginia yet. It’s been challenged in a court case, and deemed unconstitutional by a Kanawha County Judge. The case will likely be decided by the West Virginia Supreme Court.

The Department of Commerce Cabinet Secretary Woody Thrasher says that even though the state is facing a budget shortfall this year, it’s not the time to cut the Commerce Department.

“West Virginia is dead last, and the reason we’re dead last, is a variety of reasons, but relative to the Department of Commerce, it’s because we do not have the tools in our toolbox to attract business specifically, really good sites,” Thrasher said, “I think we’re doing a really good job on workforce training. I think we’ve got a great quality of life, but we are way behind everybody else when it comes to having sites ready.”

Thrasher told lawmakers the Department of Commerce would need at least $35 million in increased funding for improving the state’s business climate, attracting more industry, and for site readiness.

House Finance Vice-Chair Eric Householder, of Berkeley County, says he felt inspired by the presentation, but he says increasing the Department’s budget could be tough.

“Right now, it’s going to be extremely difficult,” Householder said, “Currently we fund Commerce roughly around $10 million a year. It’s a tough budget year, as we all know, and it’s going to be extremely difficult, but we’re gonna do what we can. You gotta keep in mind, we’re trying to get the best return on investment for taxpayers.”

Democratic Delegate Larry Rowe, of Kanawha County, is a member of the House Finance Committee. He says he feels the request from the Commerce Department is a reasonable goal to achieve.

“We’re spending $10 million, and little of that is going to programming, most is going to personnel and expenses, so what I’d like to see us do is define very clearly what that extra money would be for and where it’s going to be spent,” Rowe said.

During the presentation, Cabinet Secretary Thrasher mentioned that by the end of the summer, he and his team hope to rebrand the state by having the Department of Tourism join the Department of Commerce. He also noted how getting the state’s Community Colleges involved more heavily in training the workforce will also be key in getting more industry in the state.

House Abolishes W.Va. Women's Commission

Members in the House voted on a bill Thursday that would terminate the West Virginia Women’s Commission and put roughly $150,000 back into the general revenue budget.

The West Virginia Women’s Commission was created by the state Legislature in 1977. It’s a small, bi-partisan program under the state Department of Health and Human Resources that advocates, educates, and promotes women’s issues.

The Commission also advocates at the legislature for the passage of certain bills, and encourages women to run for political offices by holding recruiting and training events.

House Bill 2646 would eliminate the agency, which several Republican women in the House say would help the state budget. Those women also argue the services provided by the commission are duplicative.

Delegate Kayla Kessinger, a Republican from Fayette County, is the bill’s lead sponsor. She argues the commission is inefficient and not something women need to have a voice.

“To assert that women need a commission to run for office or to be successful undermines women and does nothing to empower us as a demographic in our nation and in our state,” Kessinger said.

Delegate Linda Longstreth of Marion County is one of two Democratic women in the House. She opposed the bill. Longstreth says the bill cuts an important asset.

“You know, we’re 51 percent in this state. I think we are the majority. We may not look like the majority in this House, but we’re still the majority in this state,” Longstreth said.

After more than an hour of debate, the bill passed 58 to 41 and goes to the Senate for consideration.