BRADENTON, Fla. – On the heels of vetoing the 2018 budget, West Virginia’s Democratic governor said he will negotiate with lawmakers, as long as they consider his plan.
Gov. Jim Justice called lawmakers back to Charleston on Thursday, using social media in advance of the session to lay out his requirements to “fix the budget crisis.”
Justice said he is willing to meet with Republicans and Democrats, and
“Here’s what’s at stake,” he wrote, “we’re going to fix the budget crisis.”
Justice said his plan calls for reforming the tax code while protecting West Virginians from draconian cuts, and creating 48,000 new jobs – “with almost no increase in state spending over last year.”
The governor, who faces a GOP-dominated Legislature, has submitted four bills for the session he said are the result of bipartisan negotiations.
Although the bills were not immediately available to the public Thursday, Justice’s plan likely tracks what he sought during the regular session, including a bond program for transportation projects financed by raising the state gas tax and increasing the rates of the West Virginia Turnpike tolls.
The governor also sought to increase revenues with a series of measures, including new taxes on sodas, cigarettes, wealthy state residents and gross receipts of businesses, as well as raising the state sales tax, which met with opposition in the House.
Prior to the special session, Justice reached a “compromise tax plan” with the Senate to condense the state’s five income tax brackets into three brackets and reduce the rates, according to the West Virginia Center on Budget and Policy.
The income tax reduction would reduce state revenues by $356 million to $380 million per year, the think tank said, adding that the ultimate goal is to eliminate the state’s personal income tax.
Justice vetoed the Legislature’s budget bill April 16, which closed a $497 million gap with $90 million from reserves and the rest by cutting expenses.
Senate President Mitch Carmichael, R-Jackson, and House Speaker Tim Armstead, R-Kanawha, had both urged Justice to approve the budget, saying that the state cannot continue to spend taxpayer dollars at the same level while revenue collections decrease.
West Virginia’s state revenues and employment rates have suffered due to the lack of demand for the state’s energy products, which is mainly coal.
In the current fiscal year, state tax collections are below estimates.
In April, the state’s collections were $60 million below projections, bringing the year-to-date lag to $160 million.
While income tax collections are down, West Virginia has seen a slight uptick in severance taxes on natural gas and coal production.
Gridlock on budgeting decisions and a persistent budget imbalance led three rating agencies to downgrade the state in just over a year.
Moody's Investors Service was the latest to take action, downgrading West Virginia’s $393.6 million of general obligation bonds to Aa2 from Aa1.
Fitch Ratings lowered its GO ratings to AA from AA-plus in September, while S&P Global Ratings dropped the GOs to AA-minus from AA in April 2016.
