With just over 30 days before West Virginia’s government shuts down, the House of Delegates passed a balanced budget no thanks to House Democrats who have spent the last two weeks obstructing all efforts to rein in state spending.
As I have written about here and here, the West Virginia Legislature ended the 2016 regular session without a budget for fiscal year 2017 after Democrat Governor Earl Ray Tomblin told lawmakers on the final day of session that his revenue estimates for 2017 were off by over $90 million.
He sent lawmakers home in March without extending the session so legislators could redo the budget to factor in Tomblin’s miscalculation. Tomblin left lawmakers twisting in the wind for over 60 days. While Senate and House leaders in the Republican-led Legislature were at odds whether to raise taxes, they all agreed that state government had to be cut, monies state agencies had been sitting on for years needed swept, and the Revenue Shortfall Fund need to be tapped into in order to fill a $271 million budget hole.
The Governor finally called lawmakers back to Charleston May 16 for a special session. Once again, the Governor presented a “balanced” budget that was only truly balanced if lawmakers passed three other bills: a 45 cent increase in the tobacco tax, a 1 percent increase in the state sales tax, and removal the telecommunications sales tax exemption. The latter two bills were only introduced in the Senate, as even House Minority Leader Tim Miley (D-Harrison) wouldn’t even sponsor them on behalf of the Governor.
While Republicans are typically reluctant to raise taxes, for the sake of compromise the Senate agreed to the 45 cent tobacco tax with Democrats successfully introducing an amendment dedicating the first $43 million to the Public Employees Insurance Agency. Yet every Democrat but one voted against their own Governor’s proposal. On the House side, the bill was amended to exclude vape liquids, but the bill ultimately failed with a majority of Democrats voting against along with principled Republicans who just couldn’t stomach a tax increase. Had it passed, the tax would have generated close to $80 million dollars annually, plus it would have kept the state’s tobacco taxes competitive with most surrounding states.
Why did Democrats in both chambers overwhelmingly go against their Governor and rebuff the efforts of Republicans who compromised in good faith? First, because they can now go home and campaign against Republicans who tried to raise taxes. Second, they say a 45 cent increase wasn’t enough. They want to increase the tobacco tax by $1, which would make our tobacco tax higher than border states Kentucky, Ohio, and Virginia.
Without the revenue from a higher tobacco tax, Republican leaders in the House had to go back to the drawing board on the budget. After much debate between May 26 and May 27 the House passed a balanced budget with “approximately $45 million in additional spending cuts, $49 million in special revenue account sweeps, $143 million in net Rainy Day Fund withdrawals and $34 million in other measures, including the elimination of the state casino modernization fund and greyhound purse fund.”
The bill is now in the Senate, where it will be voted on next week. It is likely on its way to be vetoed by Tomblin, who has made a stand against one-time sweeps and using more than a few million in the “rainy day fund.” Tomblin has tried to portray himself as a fiscal conservative; a former Senate Finance Committee chairman and Senate President who helped set up the Revenue Shortfall Fund. He says he has already cut state government spending, but Wheeling Intelligencer Editor Mike Myer blew a hole in this image.
Among the first things you ought to understand about state government is that the folks in Charleston are very good at making us think they’re making all sorts of sacrifices to save money.
For example, you’re heard a lot about the awful mid-year spending cuts Gov. Earl Ray Tomblin ordered when revenues began lagging during the current year. Would it surprise you to learn that after the first 10 months of the fiscal year, Charleston had spent just $47.1 million less than for the same period the previous year? Put that in the context of a $4.1 billion general revenue fund budget. It amounts to a hair more than 1 percent less in spending than during the previous year.
Here’s another interesting fiscal item: Look at state spending during the month of June. Last year, Charleston shelled out $422 million that month – about $47 million more than for any other month of the year.
Tomblin, along with Revenue Secretary Bob Kiss (a former House Speaker and House Finance Committee chairman), is playing accounting games to hide money from the public. He is protecting the slush funds of his agencies; monies these agencies shouldn’t have in the first place. Tomblin is refusing use of Revenue Shortfall Fund monies for a revenue shortfall brought about by the war on coal by Democrats.
All of this is an effort to hurt Republicans and allow for Democrats to take back the statehouse in November. House Democrats have also caucused with campaign officials representing Jim Justice, a Democrat candidate for Governor. While Senate President Bill Cole has postponed his campaign, Justice has done everything from blaming Republicans for the failure of these year’s Greenbrier Classic to attacking Cole for rescheduling a fundraiser scheduled weeks in advance. Justice, however, is silent on what he would do to fix the budget crisis.
It’s important to point out that Republicans didn’t create this mess. More than 83 years of Democrat control brought out here, plus the actions of Democrat leaders over the last 20 years. Republicans have only really been in control of the Legislature for more than 120 days: two 60 day sessions plus this special session. West Virginia’s Legislature is not a full-time body and it is made up of people who have regular jobs on top of the service they render to the state. They’re dependent on data and figures from the executive branch to do their jobs properly.
Make no mistake: Republicans are working to clean up the mess they were left with. Democrats are full of talk of what they would do if in charge, but when they saw this crisis starting to happen two years ago when they WERE in charge they did nothing. If they reclaim power they will continue to do nothing.
West Virginia’s budget problems are many. Obama’s war on coal has seen power plants and steel mills close, resulting in lower coal severance taxes. The fracking revolution has flooded the market with cheap natural gas, bringing those severance tax collections down. Businesses are closing, causing lower corporate net income taxes. People are leaving to find work, causing personal income tax revenue to plummet. Yet, the price of running state government has gone up. We’re paying more for government now with fewer people than we were five years ago with more population.
With over six months in his term, Tomblin is largely phoning it in. If the Senate passes the House budget next week, Tomblin should do the smart thing and sign it. The people of West Virginia need certainty, not political games.