Tax Reform Plan in Final Stages of Negotiations

Legislators have assembled a conference committee to work out the final details of a tax reform bill that has been at the center of budget negotiations at the statehouse for months. 

Lawmakers have spent since the end of the regular session in March formally– and informally– negotiating the tax reform bill that began in the state Senate. The Senate Republican-backed plan largely aims to repeal the personal income tax in exchange for a higher consumer sales tax.

Gov. Jim Justice joined the Senate in support of the initiative on the final night of the regular session, but during the past few weeks has met resistance from Senate Democrats and members of the House.

Wednesday, both chambers voted to send the bill to a formal conference committee to hammer out a final agreement.

“Frankly, it’s not what everybody wants,” Senate President Mitch Carmichael said of the latest version of the plan. “I think that’s the process.”

“Many people will say a good deal is when everybody walks away and no one is particularly happy about it and that’s kind of where we’re at.”

The current plan backed by Gov. Justice includes an increase of the consumer sales tax from 6 to 6.35 percent and gets rid of a number of exemptions. It also restructures the personal income tax brackets and calls for a 7 percent overall reduction in the tax rate in 2018.

Those rates would continue to be reduced in the future according to certain economic triggers—triggers that House Finance Chair Eric Nelson explained to the conference committee will be at the center of their work because they have yet to be determined.

Other areas of focus for the conference committee include the rate for the increased consumer sales tax, which Senate Majority Leader Ryan Ferns said Wednesday could be increased to 6.5 percent in the new deal to ease the concerns of some members.

The final area of contention between lawmakers is whether to charge the sales tax on construction labor—a tax that could generate more than $40 million in additional annual revenue.

The tax reform plan will provide the base for a budget bill that lawmakers must approve by June 30 to avoid a government shutdown.