Justice Wants $450M in Tax Increases Under 2018 Budget Proposal

In his first State of the State address Wednesday evening, Gov. Jim Justice presented lawmakers with a plan to close a $497 million budget gap in the 2018 fiscal year. That’s the latest estimate from the Governor’s Office about just how big that hole will be.

Credit Perry Bennett / West Virginia Legislative Photography

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West Virginia Legislative Photography

Justice’s proposal is largely based on increasing taxes, something he said on the campaign trail he wouldn’t do.

“I truly from the bottom of my heart hate taxes increases. I hate them,” he said Wednesday night.

But that didn’t prevent him from proposing them.

“The past four years no matter how hard we’ve tried, we’ve lived off of Rainy Day and we’ve lived off of the low hanging fruit that we could cut away,” he said.

During former Gov. Earl Ray Tombln’s administration, years of back-to-back budget cuts resulted in a more than $400 million reduction in the size of state government. Justice said he believes that number is actually as high as $600 million.

During the same time, the state’s Rainy Day Fund, what’s essentially a savings account, was used several times to help get West Virginia get to a balanced budget while lawmakers chose to forgo tax increases.

Lawmakers will once again have to dip into that account this year, pulling $123 million to help pay the state’s bills through the end of the fiscal year in June, but Justice said Wednesday he’s no longer willing to balance the budget on the shrinking fund. But he’s not offering up many more government cuts either.

“I truly believe that any cuts that are out there that somebody can bring me that is not going to just stifle us as a patient, I’m for,” he said. “I’m delivering to you $30 million worth of cuts.”

The $26.6 million in cuts targets 10 state agencies or programs, eliminating their general revenue funding completely. They include:

·         Regional Educational Service Agencies- $3.7m

·         WV Network- $1.7m

·         College Readiness Program- $155,000

·         Division of Labor- $2.7m

·         Vehicle Purchase Reduction- $369,000

·         Division of Culture and History- $4.3m

·         WV Film Office $341,000

·         Educational Broadcasting Authority (West Virginia Public Broadcasting)- $4.6m

·         West Virginia University- $5.9m  or a 4.4 percent cut

·         Marshall University- $3.7m or a 4.4 percent cut

Credit Will Price / West Virginia Legislative Photography

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West Virginia Legislative Photography

Outside of those select cuts, Justice said cutting state government any further would be catastrophic. That’s why he wants to raise more than $450 million in tax revenues.

“I’ve got to have everybody in this state pay a half of a penny in additional sales tax. There’s no way around it,” he said.

That’s his first of several proposed tax increases- hike the consumer sales tax by half a percent. It’s paired with getting rid of exemptions in the sales tax as well, something both the House Speaker and Senate President have said they support. Those two changes combined bring in more than $180 million in new revenue each year.

Justice also wants to create a Commercial Activities Tax at two-tenths of a percent, which he explains is a tax on the gross sales of any business. That would raise more than $214 million annually.

During the speech, the Governor’s Office released an alternative budget, one that relied solely on cuts. It would close every college and university in the state with the exception of Marshall and West Virginia Universities. It would cut Energy Express, the Hatfield and McCoy Trail, all senior services, the Library Commission, funding for farmer’s markets, and many other programs, resulting in the loss of 3,000 jobs.

Justice said that’s not what he wants to do.

“What would you rather do? Would you rather have your school plummeted even more, your seniors just forgotten, your vets forgotten, your parks closed, Fairmont State shut down, on and on and on,” he said, “or would you be willing as a peoples to say, I’m willing to pay a half a penny more and I’m willing as a business to step up and pay 2 tenths of one percent because I love West Virginia and we’re going somewhere.”

The governor’s budget also includes a complex plan to increase the state’s gasoline tax, fees paid at the Division of Motor Vehicles, and the tolls on the West Virginia Turnpike to pass a new bond for road construction.

That plan relies on not just voter approval, but on renegotiating with the federal government what roads can actually be tolled.

The Governor’s Office will present the budget plan to the House and Senate Finance Committee in more detail Thursday.