The West Virginia Legislature has completed the special session for the budget.
By Del. Gary Howell
The West Virginia Legislature has completed the special session for the budget.
I wanted to write an article sooner, but the session was extremely fluid, sometimes changing by the hour. By the time anything I wrote made it to print, it would no longer have been accurate, so I waited until now.
It was a very different session with strange political alliances, outrageous antics, accounting tricks and unrealistic economic schemes being brought forward, all the while, the taxpayer’s wellbeing hung in the balance. In the end, a balanced budget was passed that did not require tax increases, while funding important programs.
Let’s start near the end of the regular session of the West Virginia Legislature: We passed a balanced budget that funded important programs, took money from the revenue shortfall fund and increased no taxes.
The budget bill, House Bill 2018, completed legislative action on April 9. Just like you do in your household, we were living within our means, but the budget did take $90 million out of the revenue shortfall fund, the state’s savings account.
This was the earliest a WV Legislature has passed a budget in anyone’s memory. Typically, the budget is passed a week after the regular session, because it must account for every bill that passed that affected the budget. The Legislature worked very hard to make sure all bills effecting the budget passed early, so we could finish early. By passing the budget earlier than previous legislatures, we saved the taxpayer about $175,000.
That went out the window with what happened next.
On April 13, Governor Jim Justice vetoed the balanced budget. While I disagree with the Governor’s veto, I really take issue with how he did it. He held a press conference in the lower rotunda of the Capitol. He used a covered silver serving platter from the Governor’s mansion. When he removed the lid, there sat a copy of the balanced budget with bull feces on top of it. This made international news, and Democrats and Republicans alike were embarrassed.
This is not the image of our state we need to be putting forward. Imagine if you are a visiting dignitary from a major employer looking to locate in West Virginia attending a reception at the Governor’s mansion. Are you going to wonder what was on the silver serving platter that now holds your cheese and crackers?
In West Virginia, when the Governor calls the Legislature into special session he is required to put on the call why we are there. On April 26, the Governor said he would call us into special session on May 4. The only real reason to call us into session was to pass a budget and the Governor is required to present the Legislature with a budget to consider.
When we arrived on May 4, the Governor put no budget on the call for the special session. On May 6, after two days, the Governor had still not put a budget on the call, so the House and Senate agreed to adjourn for 10 days to give the Governor time to prepare a budget. This action saved the taxpayer $350,000.
When we returned on May 16, the Governor had still not put a budget on the special call. What was on the call was a so called, “revenue bill.” Revenue bill is the term used when politicians don’t want to call it a tax increase.
The House worked the bill into one that would broaden the sale tax base to items currently not taxed, but lowered the overall rate. In the end, the new sales tax rate would have ended up being lowered to 4.75 percent and the taxpayers would have seen an overall sale tax cut of over $250 million, spurring cross border sales as people from neighboring states would have begun to shop in West Virginia to save on a large ticket items.
I was happy to vote for this tax cut, but sadly, the Senate did not take up the bill in that form. We then adjourned until May 23, since we still didn’t have a budget bill from the Governor - saving another $140,000.
When we returned on May 23, the Governor finally presented the Legislature with a budget, something he should have done on May 4. The general revenue portion of the budget presented was $4.35 billion. This was far above the $4.055 billion estimate for the next fiscal year. So, it was accompanied by a $200 plus million “Revenue Bill,” aka tax increase.
The old adage “Politics make for strange bed fellows” became reality for the next two weeks. A strange battle was waged with Senate Republicans and the Democrat Governor supporting an increasing sales tax plan with a minor reduction in income taxes, while Senate Democrats and the House opposed the plan. During the two weeks, there were many plans presented, but in the end, all failed. There was not much appetite to increase taxes on the people of this state.
Nearly all of the economic indicators from January forward show the state’s economy improving and during the three of the first five months of the year the state revenues have exceeded estimates. None of this improving economic activity was being reflected on new revenue estimates. On June 13th, the Governor’s office finally changed the revenue estimates to reflect the improving economy. The new estimates were $4.225 billion. Work immediately began on a new budget using these numbers.
The next day the House passed a $4.225 billion balanced budget that required no new taxes. Basically, it was the same budget we had passed at the end of session, without using the revenue shortfall fund money and reducing some cuts to other programs again we are living within our means. Two days later the Senate agreed to a slightly modified version, but still at a $4.225 billion. Once the legislature had the corrected revenue estimates (which are still low) we passed a budget in three days.
During the budget process, many of you contacted me. Overwhelmingly you repeatedly said, “Don’t raise taxes!” I heard you loud and clear, and as usual I voted against all tax increases, but many of you had other concerns. A lot these concerns were founded on false information from special interest groups and even some state agencies that feared budget cuts. Aged and disabled wavier programs, like the IDD wavier programs, were a top concern for many of you. In every form of the budget, including the final budget, these programs were always fully funded. K-12 education was also funded fully, including the automatic annual employee pay raise.
There were cuts to higher education: with WVU Keyser being part of WVU, this was a primary concern to me. Originally the Governor proposed about a $58 million cut to WVU, but the Senate knocked that down to $14 million and a group of us in the House pushed even further and got the cut reduced to only $6 million.
Now the state funding only accounts for about 17 percent of WVU’s overall budget. So, the $6 million reduction equates to a reduction of only 0.89 percent of their total budget and a flexibility in spending bill that became law early this year will allow them to absorb that very easily, according to those from WVU that spoke to the legislators.
The other cut was $38 million to Medicaid medical services, according to the description of this cut the public will see no difference as this is primarily an accounting trick. This is a line item that routinely is adjusted throughout the year as its funding level is a guess, since people use different medical services at different times. It is always underfunded and we supplement it throughout the year. Last year we used unspent money from other state agencies to supplement this fund to the tune of $100 million above the line item in the budget. This year will be no different and with the economic indicators showing good times ahead, it is highly likely we will be able to restore additional funding to higher ed.
During the regular session, we passed Road Bond Levy for the Governor to put on the ballot. This bond levy is to allow the Division of Highways to issue bonds for highway construction and maintenance. This will require a revenue stream (tax increase) to pay for the bonds should you pass the special bond levy.
During the special session a $130 million tax increase bill was presented by the Governor to increase the DMV fees (Example: a basic license plate will go from $28.50 a year to $50 a year) sales tax on the purchase of a car will go from 5 percent to 6 percent and the gasoline tax will go up 3.5 cents per gallon. An amendment was offered to only allow these increases to go into effect should you pass the bond levy. It failed, as a result there is nothing tying this tax increase to the bonds.
If the bond levy was to pass now, then the Governor can say, “Now we need another tax increase to pay for the bonds.”
I voted against this tax increase, because you asked me to and it really hits the low income and working West Virginians that travel some distance to work and need their vehicles for transportation. This is a bigger chunk of their income when compared to the more affluent in the state. We cannot continue put additional burden on the remaining taxpayers of the state. We need to grow the economy.
Growing the economy is a primary concern of mine. I always try to make effective use of my time in Charleston. One thing I do when I have down time is locate businesses that are looking to expand. I contact them and ask them to consider Mineral County for their expansion project. To date I have contacted over 500 growing companies. A few have contacted me for additional information about our location, like the Siracha Sauce company. We didn’t get them, but we can’t stop trying. When a company contacts me, I provide what information I can and put them in contact with the state Development Office, county Development Office and Mineral County Chamber of Commerce.
I get some tips from constituents that I follow up on. Economic Development is a team effort, so if you know of a company that is looking to expand and grow please let me know. I will be happy to contact them to help get them to locate in Mineral County, and if you have any other suggestions or questions please contact me, because I work for you.
My phone is 304-340-3192 and my e@mail is Gary.Howell@WVHouse.gov