After more than three months of a budget impasse and 16 days until a potential shutdown of state government, there’s light at the end of the tunnel. That light comes in the form of Monday's completion of a tobacco tax increase and the passage of the budget in the House of Delegates.
Lawmakers have been scrambling in recent weeks to fill a $270 million budget gap, caused in part by declining revenues from coal severance taxes and low natural gas prices. House members voted 84-15 to pass a budget bill Monday that covers that hole.
The bill calls for nearly $4.2 billion in total spending and draws $70 million from the Rainy Day Fund, according to House Finance Chair Eric Nelson. He spoke to the fiscal health of the state’s emergency reserve fund.
“Our current balance is $812 million. $32 million was taken out last week because of the supplemental we passed to balance [the budget for Fiscal Year] ‘16. You take this additional $70 million out and we are projected to be at $710 million—17 percent of our general revenue,” said Nelson.
“That’s in the top seven in the nation. We’re down from the top four,” he added.
Nelson, like many members of the House, say the budget isn’t necessarily ideal and that structural changes will be necessary in the future.
Del. Tim Manchin was one of the no votes on the budget bill, arguing that to achieve true balance, there shouldn’t any money pulled from the Rainy Day Fund.
“This is not a balanced budget. A family’s balanced budget is when your revenues equal out to your expenses. This doesn’t do that,” said Manchin.
Last week, Governor Earl Ray Tomblin vetoed a version of the budget that drew $182.6 million from the Rainy Day Fund.
The current version of the budget was amended twice on the floor, before members moved to suspend constitutional rules and bring the bill onto third reading and up for a vote. One amendment, from Del. Saira Blair, reinstated $500,000 in cuts to Blue Ridge Community and Technical College.
Another amendment, from Del. David Perry, restored $1.5 million of $2.5 million in cuts to the West Virginia Center for Professional Development. The center facilitates training for teachers and principals.
“At a time when all studies and all education indicates that ongoing staff development should be an integral part of our educational system, we’re looking at abolishing one agency which does this, which has done an incredible job within the state and will continue to do an incredible job within the state,” said Perry from the floor.
As a result of the amendments, the budget bill goes back to the Senate before heading to Gov. Tomblin's desk, where he's expected to sign it.
After the passage of the budget in the House, Senate Finance Chair Mike Hall indicated that the upper chamber is readying itself to send the bill to the Governor.
“I was kind of surprised that they added some additional spending. We talked about cutting government for a long time and--we get down to the bitter end—some things are added back in,” said Hall.
“But that’s the way it is. As we consider some things, I think the Senate is going to concur in most of their amendments.”
The budget’s current form is largely a result of the passage of a 65 cent tax hike on cigarettes and other tobacco products, which is projected to bring in $95 million annually. That bill, SB 1012, passed the House, 63 to 35.
An amendment from Delegates Brent Boggs and Eric Nelson removed a section of the bill that would have prevented municipalities or counties from levying their own taxes or licenses on the sales of tobacco products.
Delegates shot down other amendments to the bill, including one from Del. Larry Faircloth that would have removed e-cigarette and vaping products. Another failed amendment by Del. Isaac Sponaugle would have dedicated the first $43 million in revenue from the tax to the Public Employees Insurance Agency (PEIA).
To make the budget deal more palatable for Democrats, Tomblin said in a Sunday news release he'll introduce legislation with $15 million extra for Public Employee Insurance Agency beneficiaries if the GOP-led Legislature passed his tobacco tax increase.
Tomblin says the proposal would reduce anticipated 2017 budget-year premium increases from 12 percent to 6 percent, and reduce possible 2018 increases.
Senators concurred with the House’s changes to the tobacco tax bill during an late afternoon floor session. It now goes to Gov. Tomblin for his signature. Tomblin’s PEIA measure is among other pieces of legislation that are expected to be introduced Tuesday.
Just prior to the passage of the tobacco tax increase, the House also passed SB 1011, which reduces distribution of funds to the West Virginia Infrastructure Fund from $30 million to $40 million. That $10 million dollars would be swept to the budget for Fiscal Year 2017.