On Friday, May 27, the House of Delegates passed a budget that includes no tax increases. It funds Promise Scholarships, Medicaid and Public Employees Insurance Agency (PEIA) fully, as defined by the governor in his January 2016 State of the State Address. It also funds the general operation of state government with small reductions in many departments.
The House budget goes to the Senate for consideration this week. If it passes there it would then go to the governor to be signed.
The budget challenge is a result of the governor’s economic experts overestimating tax revenue coming in to the state. This is not a criticism of them; it is a result of unexpected low global energy prices which have slowed natural gas and coal production in West Virginia. Contributing to the problem is the over-regulation of energy production driven largely by the EPA, as directed by President Obama. When gas and coal production slows, jobs are lost and all tax revenue, from severance tax to income tax and sales tax etc., generated by that production is decreased. Without income from those tax sources, there is less funding for needed government services.
Another contributing factor to the shortfall has been the poor economic climate for job creating businesses in West Virginia over many decades. Those regressive policies have contributed to the migration of businesses, and of our working age people, to states that have better job opportunities. That migration has been so large that West Virginia will likely export enough population to cause us to lose a representative in the US House of Representatives following the next census in 2020.
The good news is that we now have a group of legislators who understand the problem, and who will do the difficult work to improve our state. We have passed legislation in the past two years to improve the job climate, to improve our economic circumstance, and to keep our young workers here in West Virginia, but those changes will take some time to show results. We are moving in the right direction in those areas though.
Some background. During the regular 2016 session of the state legislature, the revenue shortfall was about $450 million dollars. One of the proposals to compensate for that shortfall was to increase taxes on West Virginians. In the House, tax increases were rejected; we chose instead to reduce government spending, reduce subsidies to casinos, and reduce subsidies to greyhound racing. Those actions, along with other savings, allowed us to direct more money back into general revenue; resulting in a balanced budget without tax increases. Unfortunately that budget was set aside when the governor, on the last days of the session, increased the shortfall projection by another $92 million dollars.
In the past two weeks of the special session, we re-visited the tax increases and once again rejected them. Almost all Democratic members of the House voted no on a 45 cent tobacco tax increase; some insisting on even higher increases than were on the agenda. Many Republicans rejected tax increases; focusing on reducing inefficient government spending, and again reducing subsidies to gambling enterprises to meet the budget challenge.
So while there is still disagreement on specific issues, the House version of the budget has passed and we will continue to evaluate areas for potential savings and efficiencies in state government. I am hopeful that the Senate will accept our legislation to cut taxpayer subsidies to dog racing and slot machines; I can only trust that the Governor will sign this balanced budget.
Delegate Jim Butler, R-Gallipolis Ferry