Sales Tax Hike Gaining Traction in W.Va. Senate

After calls from members of the Democratic Party, Senate leaders have decided to move forward with a tax increase that could potentially solve many budgetary problems for the 2017 fiscal year and rein in the even larger problems looming in the 2018 budget year. 

Tuesday, members of the chamber’s Finance Committee began discussing a bill introduced listed on Gov. Tomblin’s special session call that has yet to be taken up– an increase to the state’s consumer sales tax.

The bill as introduced allowed for an up to one percent increase in the state’s 6 percent sales tax.

The Senate Finance Committee;s amended version, which will be taken up a second time Wednesday, would sunset the tax hike in three years, rolling back the 1 percent increase on July 1, 2019.

Until then, however, the bill would bring in $196 million during the 2017 budget year and $214 million each year after.

“I don’t think that we would have had as much interest in this initially as we do now,” Senate Finance Chair Mike Hall said after a Tuesday afternoon meeting.

“We’d had conversations with people about whether or not they’d warm up to the idea and I think given the crisis, as it looms, part of the process of legislation is people become more aware of the circumstance.”

Other attempts at increasing taxes this special session have failed, though, including a proposal to increase the state’s tax on various tobacco products. The bill died in the House of Delegates last week.

Hall admitted getting the tax increase to pass both chambers will be a heavy lift.

“I just thought it was time to begin this conversation and see how far we get with it.”

Democrats, like Senate Minority Leader Jeff Kessler, have pushed Senate leaders to come up with a more comprehensive solution to the state’s budget problem. This bill would help close the state’s budget gap in 2017, leaving about a $70 million deficit, and bring the 2018 gap down from more than $380 million to around $160 million.

Senate leaders intend to put an amended version of the Senate budget to a vote by Thursday, sending it over to the House of Delegates and inevitably into a conference committee, where members of both chambers will negotiate the final version.

Hall said Tuesday that version of the Senate’s budget will not include the increase to the state’s sales tax, but will instead rely on nearly $200 million in Rainy Day funds to find a balance.

If both chambers approve the sales tax increase, though, Hall said the conference committee can consider the 196 million in new revenues for the 2017 budget year.

That new revenue, according to the Senate Finance Chair, would keep lawmakers from raiding the Rainy Day Fund and from having to implement most major cuts to state agencies.