Delegate Eric Nelson Story Archives - West Virginia Public Broadcasting

PEIA Board Fights Budget Bill

With less two days left in the 2016 Legislative Session, members of the Finance Board for the Public Employee’s Insurance Agency, or PEIA, have serious concerns about the changes to the state budget with regards to the agency’s funding.

The budget bill, containing a line item to take $67 million dollars from the state’s rainy day fund and other special accounts in order to fund PEIA, was debated for several hours on the House floor Friday.

During this session, the Democratic Party has criticized the majority for ignoring the need for additional funding to PEIA, while some Republican members argue the current budget does fully fund the program.

In a press conference this morning, six people spoke in direct opposition the current budget bill, saying there is no agreement between the House and Senate leadership on how to fund PEIA, an agency that provides health care coverage for more than 230,000 West Virginians.

Joshua sword is Secretary-Treasurer for West Virginia AFL-CIO and a member of PEIA Board.

“We’re facing roughly $50 million to $60 million dollars in inflation every year, as well as adding new people to the book, so we’re roughly $100 million short for the next plan year,” Sword said. “The legislature promised us that they were going to come up with a dedicated revenue stream for 2016 and beyond and here we are at days 59 and 60 and they haven’t done that.”

PEIA has seen no additional funding for the past few years, yet an increase in membership and rising prices. In previous years, the agency was able to offset benefit reductions with reserve funds, which came from what could basically be considered a savings account the agency built up with excess revenues over the years. Sword says dipping into the one-time dollars is a temporary fix, one that will leave the program even worse off next year.

“The problem that creates is that it might make it okay or doable for the plan year 2017, but when we start talking about plan year 2018, we have to make up that $67 million plus the additional rate of inflation we’re facing for the following year,” Sword said. “It puts us right back in the same place where we were when we start this discussion a few months ago, at roughly $120 million in benefit reduction for the next year.”

House Finance Chairman, Eric Nelson, defended his committee’s budget on the floor Friday, saying they had to consider all options in the extremely tight budget year.

“I will say that our budget is in very difficult time right now,” Nelson said. “Whether it be revenue measures or other expense cuts, or additional cash sweeps, all of those are on the table and need to be on the table. A 60-day session is not sufficient time for this body to be prudent.”

Other Republicans defended the measure as well, including Delegate Michael Ihle, who is also the mayor of Ravenswood.

“We’ve heard a lot about 1 in 6 or 1 in 7 West Virginians, who get PEIA,” Ihle said. “What about the other six out of seven? Many of whom have had their insurance skyrocket by a lot more than 12 percent, if they’re even lucky enough to have insurance.”

Earlier this session, a bill was killed in the House Finance Committee that would have increased the tax on a pack of cigarettes by one dollar. The Senate had approved the tax and dedicated some of the revenues to the PEIA reserve account, allowing the program to help sustain itself into the future. Both Democrats and Republicans voted against the bill in the Committee.

House Continues Fight Over Funding Bill

Members of the House of Delegates are still debating a bill that would take money from the Rainy Day Fund to balance the 2016 budget, but it’s a fight over PEIA, the public employee’s health insurance program, that’s stalling the crucial legislation.

Senate Bill 364 was requested by Governor Tomblin to help close a nearly $400 million budget shortfall for this year. It takes nearly $52 million from the Rainy Day fund to help close the gap.

But Democrats in the House tried to amend the bill Monday to take an additional $58 million from the state’s reserve fund to cover another shortfall in the public employee’s health insurance agency – one that will cause costs to increase for state employees and retirees.

“This is the first financial bill that’s come before this House,” said Democratic Delegate Isaac Sponaugle of Pendleton County, “it’s an emergency situation. We are now on the twentieth day of legislative session; nearly one third through, and yet, we have yet to address the PEIA funding crisis in the state of West Virginia.”

The Democratic amendment to help fund PEIA was voted down. Many Republicans called it an irresponsible use of one time monies to fix a long term funding problem.

“We are all very concerned about the PEIA shortfall,” said House Finance Chairman, Delegate Eric Nelson of Kanawha County, “It’s been projected that in fiscal year 2017, so that’s the year that starts July 1 and goes forward, it’s projected that there’s a shortfall of $120 million. There’s not been legislation that has come before any committees yet, but I guarantee you there will be legislation to address that particular shortfall…but we’re talking about using one time monies out of our savings account, our Rainy Day Fund, to fund an ongoing obligation that hits it for one year, but what about the future years?”

The bill to take money from the Rainy Day Fund will be up for a vote Tuesday in the House.

Higher Education Budget Cuts Threaten University Programs

In Governor Earl Ray Tomblin’s State of the State address last week, he proposed budget cuts all across the board, and Higher Education is looking at another big reduction this year.

For years, Higher Education in West Virginia has endured budget reductions from the state legislature. Some representatives from the state’s public universities have voiced concern that lawmakers aren’t taking the cuts and their impacts on the system seriously, and with a proposed 14 million dollar cut by Governor Tomblin again this year, they’re not feeling much better.

Concord University President Kendra Boggess, says the continual cuts make it difficult to keep West Virginia schools competitive because they often result in the cutting of classes or student activities.

Lawmakers have consistently stated that higher education is important to have a successful workforce and to improve population growth, so why do these budget cuts keep happening year after year? Boggess argues it has to do with the way the state code is written.

“We are not one of those budgetary areas that can go without being cut,” Boggess explained, “I mean, there are certain things like public education, K-12; in the code it mandates a certain amount be spent on schools of that, those schools, but we’re not in that, and so we are one of the areas that can be cut when there are inadequate budget, when the budget hasn’t been met.”

As a response to the budget cuts, many universities and colleges in the state have increased tuition. Boggess warns tuition hikes could result in losing potential students or force students to drop out.

In a report released last May, the West Virginia Center on Budget and Policy said schools have increased tuition by 32 percent since the 2007-2008 school year.

Ted Boettner, the center’s Executive Director, notes that the state has the lowest share of citizens with bachelor’s degrees or higher. He suggests the state raise money by closing tax loopholes.

“If you go get your hair cut today, you’re not going to pay a sales tax at the barber, but if you, you know, buy a book at the bookstore, you’re going to pay sales tax,” Boettner explained, “so I think we have to make sure that we’re treating everybody fairly, and we also, when we look at tax increases that we don’t just think about taxing low and moderate income families, but that we also point to the people who have got the most out of economic growth over the last thirty years, and those are the people in the top 1 percent, top 5 percent; I think we need to ensure that they’re paying an adequate share.”

Lawmakers on the House Finance Committee are planning to look closely at legislation that could help improve the budget for higher education institutions, but many say it’s still too early to say what specifically they’ll propose.

“To balance this budget, I mean there’s revenue measures, there’s cuts, can we move other funds around, we’re going to look at anything,” said House Finance Chairman, Delegate Eric Nelson of Kanawha County, “and you know, we’ve got some very needy colleges that are really producing in certain areas of the state that have been underfunded the last three, four years; up in the Eastern Panhandle, when you talk about Blueridge Community College and Shepherd, and we can just go right across the board, so we’ll look at various options and also ask the universities how they can be creative.”

Nelson adds in a tight budget year, his committee will be looking for creative solutions to fund more than just higher education.

Economists, Administration Issue Words of Caution for Tax Reform Committee

Delegate Eric Nelson says there are three main goals for the Joint Committee on Tax Reform: to ensure West Virginia’s tax code is fair, simple and structured to promote economic growth. The House Finance Chair also serves as the co-chair of the special interim committee.

Members held their second meeting in Charleston Monday as they move forward with the first study of the state’s tax code in 9 years. The most recent study came in 2006 under Gov. Joe Manchin. Before that, the system hadn’t been reviewed since 1999 under Gov. Cecil Underwood.

Members were given an overview of the current structure, what taxes and tax credits are in place and what goods and services are exempt.

They also had a history lesson on West Virginia’s tax code, reaching as far back as the turn of the 20^th century to explain the policy and political decisions that resulted in the state’s personal income tax, broad sales tax and property tax system in place today.

Those three taxes make up the largest portion of the state’s income, aside from lottery funds, and they help provide almost all of the services the state offers.

So, with a committee full of first time leaders–after the Republican take over– and even some first time legislators, all of the presenters urged extreme caution as they move forward.

“I don’t think the end result of any study has to be a comprehensive 800-page bill which substantially or fundamentally changes the tax structure immediately,” Revenue Secretary Bob Kiss, former Speaker of the House and House Finance Committee Chair, warned.

He was joined by attorney Michael Caryl and economist Dr. Calvin Kent in issuing words of caution throughout the six hour session. Caryl was involved in the Manchin review while Kent worked on the studies under both administrations.

“Everything is interconnected,” Kent said, “and if you do change one tax, you’re going to wind up with ripples that are going to affect other taxes, which may be very negative.”

Nelson says he hears their words of warning and is taking them seriously.

After talk from both House and Senate leaders that this committee may have legislation ready for a special session this fall, or at least by the 2016 session, Nelson is backing away from those notions.

“I think that there’s always an interest in making positive moves in a timely fashion,” he said Monday. “As we started getting more involved with this and talking with different people a timeline is the last thing we want to put on the table.”

The Joint Committee has scheduled its next meeting for May 18 where they’ll hear about the changes other states have made to their tax codes in the recent past. Presenters will include the National Council on State Governments, the Tax Foundation and the Council on State Taxation.

Nelson said the committee also intends to hear from those affected by tax changes, but only mentioned industry as being on the agenda so far. He maintained, though, all interest groups will have a voice.

Bill to Recalculate Base Tax Revenue Passes in the House

The House considered House Bill 2562 Monday, relating to sales tax increment financing. This bill would authorize recalculation of the base tax revenue amount, specifically in reference to Morgantown and other areas of Monongalia County.

Delegate Eric Nelson, the House Finance Chair, explained the bill and says it will help infrastructure in Monongalia County.

“This is an evolving form of financing,” Nelson explained, “As we move forward as a state and look to create opportunities for new economic development, part of that is having some funding sources. The state is not at risk in this. They do not own the bonds. What has been described here, comparing this as a mortgage, the state doesn’t have a mortgage on this. There are other people that hold these bonds looking to the development up in Morgantown, the excess development, the excess sales, that will pay off their funding that they’ve put in place so that we could finish the development of this area, this interchange, bring in new business to help the whole community of Monongalia County and Morgantown.”

Delegate Doug Reynolds opposed the bill saying it was too vague.

“People in Morgantown got their baseball stadium; the only issue here is, and I’m not sure whether the fifteen million was too high or too low, is who bares that risk? The bond holders or the tax payers of the state of West Virginia?” Reynolds asked.

Delegate Cindy Frich of Monongalia County supported the bill and says it must be passed if Monongalia County’s infrastructure is to improve.

“I heard Mon County’s getting a baseball field, or we got our baseball field, WVU got their baseball field. If this does not go forward, Monongalia County will not get their infrastructure improvements, will not get the interchange, will not get infrastructure for development of one of the least development parts of the county, with one of the poorest schools, accessing, poorest children accessing a school in the area,” Frich said.

Delegate Nelson spoke again before passage, urging support of the bill, and saying it’s just one step in the right direction.

“Let’s look at other forms of development that we have utilized throughout this state,” Nelson said, “How many new entities have come into this state that have received a tax credit of some form or another? We’ve had quite a few of those. So this just happens to be a form of financing that is basically cutting a base at a certain level, and everything above that is benefit to private players taking a risk on the assumption of growth. The state is a party to that, because we’ve looked ahead, set a base, and we go off that.”

House Bill 2562 passed 75 to 20.