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Member's Press Release

Release Date: 06/27/2017
Contact: Delegate Eric Nelson at (304) 343-5156


Eric Nelson


Op. ed.: The Real Story Behind the State Budget

We now know that Gov. Jim Justice has allowed the constitutionally required West Virginia budget for Fiscal Year 2018 to become law without his signature.

Once again, he used a press conference to grandstand and marginalize the process by complaining about certain aspects of the budget that aren’t politically popular, without taking any responsibility as “negotiator in chief.”

The delay in our state budget began with his State of the State address on Feb. 8 when he proposed a 5-percent increase in spending. This equated to $200 million in additional spending over the FY 2017 budget of $4.3 billion and $450 million over projected revenues of $4.05 billion.

His plan for balancing the budget was to impose the largest tax increase in recent history by increasing the consumer sales tax to 6.5 percent, eliminating the sales tax exemption on cellphones and advertising, and imposing a tax on business gross receipts.

The Senate and House began their respective budget processes by focusing on current revenue and expenditures.

The Senate, following the work of a joint tax reform committee, began work on a plan to reduce personal income tax rates by 20 percent and set a path for future reductions.

To replace the lost revenue from lower income taxes, the Senate plan called for increasing the consumer sales tax to 7 percent or more.

Alternatively, the House took an approach of maintaining the sales tax at 6 percent but broadening the base by removing exemptions from sales and services not currently covered.

During our regular and special sessions, the normal budget process was consumed by the Senate’s effort to implement tax reform into balancing the budget.

A bipartisan majority of House members rejected this effort three separate times.

Members were concerned with raising sales and corporate taxes to levels that would be uncompetitive with surrounding states — as well as future budget holes that would have been created by lowering the personal income tax.

It’s worth noting that 60 percent of the House has served in the body less than two terms. Many were elected on the expectation by voters they would not raise taxes and would make state government more efficient.

Disagreements continued during May and June with multiple stakeholder meetings and plans discussed between the governor and leadership of both parties in both chambers.

The many hours of meetings outside the paid special session — and the days in special session — produced ever-changing proposals to generate revenue and implement tax reform.

The House was able to put solid proposals on the table, but many dug in their heels. All of us had certain principles we stood for.

In my opinion, all failed to see the big picture and realize we can’t address tax reform during an extended session, particularly as plans changed by the minute — which also prevented quality data on each plan to analyze.

With the budget bill that passed, Republican leadership, in conjunction with the executive branch, has reduced the cost of government 2.5 percent — from $4.36 billion in FY 2015 to this most recent budget of $4.225 billion.

We are running out of runway on cuts, and we need to broaden our revenue base. But we need to be practical and methodical, and we need to make sure we aren’t disruptive.

The governor can pick on a few aspects this budget failed to fund, but it takes leadership, votes and a signature (or not), to pass a budget. The legislative branch did its part; we voted, and we stand by our vote.

Yet this budget maintains funding for K-12 programs, funds many high-need and high-touch healthcare programs and maintains full funding of PROMISE Scholarships.

Separately, the roads bills the Legislature passed will be a lifeblood to our economy.

West Virginia was dealt a blow with the decline of the energy market three years ago, causing a loss of $300 million, 7 percent, of general revenue.

Future discussion must focus on priorities that are best for West Virginia and grow the economy, which grows revenue.

The governor can blow back all he wants, but he must step up and show the world why our state is a good place for business development.

He must listen to those at the table and acknowledge the many solid ideas in front of him.

We can study and implement tax reform at the right time, we can remake and diversify our economy, and we can use our beauty, location and university structure to leap into the 21st century with technology and redeployment of resources.

For now, we must use the remainder of the year to devise solutions to our revenue and budget problems and not wait until next session.

***

Republican Delegate and House Finance Chairman Eric Nelson represents the 35th District, which includes portions of Kanawha County.




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