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West Virginia Lawmakers to Discuss Taxes, New Court

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Lawmakers are looking forward to doing work that doesn't involve trying to dig West Virginia out of a deep financial hole, although they're not ready to declare the state's dilemma over.

House Speaker Tim Armstead and Senate President Mitch Carmichael, both Republicans, were upbeat during the annual Legislative Lookahead forum Friday about the potential progress that can be made in the coming months under Gov. Jim Justice. Justice took office last January as a Democrat. He switched to the Republican party in August.

"We're not saying we're out of the woods and we don't have economic challenges," said Armstead, from Kanawha County. However, "that is an incredible advantage from where we were last year."

"I do anticipate we will end this fiscal year without having to go back in and fill gaps and fill holes," he said. "As we go into our new budget, then we'll be able to do so without looking at any type of tax increase."

A year ago, tax collections were more than $100 million behind estimates, and Justice warned just weeks into office that this year's budget deficit could be $500 million.

Yet overall general revenue fund collections through the first half of the fiscal year that began in July are nearly $106 million ahead of the previous year. Revenue Secretary Dave Hardy said this is the first time since 2012 that West Virginia's collections have been above estimates at the fiscal year halfway mark.

"Now this feels good," said Carmichael, a Republican from Jackson County. "We're on the right path."

One focus of this year's session, which begins next week, will be eliminating a tax on manufacturers' equipment and inventory, which Armstead called a "job killer."

Getting rid of the tax all at once would be devastating to counties and schools that depend on it. Instead, lawmakers will work toward a goal of phasing it out over seven years. Eliminating the tax would require voters to approve a constitutional amendment.

"We will not end 2018 with this tax gone," Armstead said. "We will start the process. At least we'll be moving in the right direction."

But Delegate Brent Boggs, a Democrat from Braxton County, said the state must be careful in addressing the tax "in a way that doesn't put our state finances in a precarious position."

Carmichael said another impediment to job creation is the state's lack of an intermediate appeals court. Forty-one states currently have them. Such courts are seen as providing a quicker turnaround for individuals and businesses hoping to appeal lower court decisions.

Lawmakers have considered creating such a court since at least 2009, when a commission formed by then-Gov. Joe Manchin proposed that step and others to improve public confidence in the state's judiciary. A 2011 bill carried a $5.2 million-a-year price tag.

"We've talked about it for years," Carmichael said. "I'm hopeful this year that we can work very hard to attain that. I think that would be something that would really move West Virginia forward."

Lawmakers also said there would be attempts this session to help the natural gas industry, including exploring ways to promote local industrial use of the state's reserves and addressing the issue of "co-tenancy," which would authorize drilling when most owners of a land parcel want to allow it.

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