House Finance Committee Story Archives - Page 2 of 2 - West Virginia Public Broadcasting

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 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.

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.

Road Funding Bill Could Be Dead in Committee

A House committee has removed a bill from its agenda that would increase Division of Motor Vehicle fees and some taxes to help fund road maintenance and construction projects.

During the Tuesday morning meeting, House Finance Chairman Eric Nelson announced to the committee the bill would be taken off of the agenda because the support needed to pass it isn’t there.

As approved in the Senate, the bill would add a trigger to increase the state’s gasoline tax by 3 cents when the wholesale price of a gallon drops below $2, but also generates money for the state road fund through increased taxes and fees.

A House Finance subcommittee of seven members discussed the bill on Friday, and suggested the committee as a whole move forward with caution because of the included increases.

There were two pending amendments to the bill that were suggested by the subcommittee.

It is unclear if the House Finance Committee will put Senate Bill 555 back on the agenda.

The 2016 legislative session ends Saturday, March 12, at midnight with a budget session to follow.

House Finance Passes Bill to End Racetrack Modernization Fund

A House committee has advanced a bill that would halt the state-funded updates to casinos and casino games.

House Bill 4271 ends discretionary transfers to the Licensed Racetrack Modernization Fund. Proposed on behalf of Governor Tomblin, the bill would end the program that was set to expire in 2020 four years early — putting $9 million a year back into the general revenue budget.

The Licensed Racetrack Modernization Fund pays for updates to casino games and without it, Del. Erikka Storch from Ohio County says she’s concerned the state’s four racetrack casinos won’t be able to stay competitive with out-of-state businesses, specifically in the panhandles.

“For the panhandles, we have the added need to attract people, when, you know, a lot of the customer base that Wheeling Island sees is from Ohio. Well we have to still encourage people to come from Ohio as opposed to stopping in Columbus or any of the new facilities that are going up in that area. We want to encourage them to come to West Virginia; spend their dollars here,” Storch said.

There are four major racetracks and casinos in the state; one in Charleston, one in the Eastern Panhandle, and one in the Northern Panhandle which would be directly affected by the legislation.

The bill was reported to the full House Saturday.

Tomblin Seeks to End Special Casino Fund

The state’s budget is always the final bill approved by lawmakers before they end their legislative work for the year. But even though that vote won’t come until the end of March, members of the House Finance Committee are already looking for ways to deal with declining revenues. On Wednesday, they focused in on lottery funds.

The West Virginia Lottery Commission has generated 22.1 billion dollars since it was created in 1985. More than 8 billion dollars of that revenue has gone to support senior programs, education and tourism.

Representatives of the Lottery Commission presented their budget to the House Finance Committee Wednesday morning, and discussed ways the Legislature could help the industry be more competitive with surrounding states while helping to balance the budget by the end of the 2016 session.

Lawmakers also discussed the future of the Racetrack Modernization Fund. Lottery revenues each year are set aside in the fund to help casinos pay for updated video lottery games, helping to keep them competitive with out-of-state casinos.

However, Governor Tomblin’s Cabinet Secretary Bob Kiss says the Racetrack Modernization Fund will be going away.

“The Modernization Fund, which is going to expire anyway even under current law, is not something that was ever intended to be in place permanently; I’m sure you can hear different opinions, but the governor believes that it can be ended now, and we’ll make a proposal to do so,” Kiss explained.

Instead of relying on the Modernization Fund, Acting Director John Myers, says the lottery commission is looking for novel ways to generate new revenue. Things like online poker and a smartphone-based iLottery.

No legislation was proposed during Wednesday’s House Finance meeting, but lawmakers say they will be thinking of ways they can improve the state’s revenue through the lottery commission.