No Bull: West Virginia Governor Vetoes Budget

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By Leslie A. Pappas

West Virginia Gov. Jim Justice (D) vetoed the Legislature’s budget bill April 13, calling it “bull-you-know-what” as he unveiled what appeared to be a pile of cow dung on a plate.

“I can’t be any more blunt than to tell you this the way I see it,” said Justice of H.B. 2018, dramatically lifting a silver domed food cover off his newest budget metaphor. Justice has likened earlier versions of the budget to a “nothing burger” and a “mayonnaise sandwich"—items he also revealed with a butler’s flourish before finally uncovering a plate of two brown lumps.

The veto means that Justice will need to call lawmakers into a special session in the coming weeks to finalize the budget and figure out how to plug a $497 million budget gap for fiscal year 2018.

Approved by the House and Senate in an extended legislative session that ended April 9, H.B. 2018 would have taken $90 million out of the rainy day fund to replace Medicare cuts without raising taxes.

Justice attempted an eleventh-hour deal with the Republican-controlled Senate to pass a different version of the budget, but it didn’t get through the House.

That bill, S.B. 484, could be the starting point for budget negotiations moving forward, said Ted Boettner, executive director of the West Virginia Center on Budget and Policy, a nonprofit policy research organization that has analyzed the budget proposals.

Lawmakers would need a two-thirds majority to override the governor’s veto.

Commercial Activities Tax

Justice has proposed various ways to increase revenue, in part to pay for road and infrastructure projects that would create 48,000 jobs, Boettner told Bloomberg BNA. But Justice “really wants the road package.”

One of the more controversial proposals for business was the commercial activities tax (CAT).

The West Virginia Chamber of Commerce said at the end of March that it would to support the governor’s proposal to levy a .00045 CAT on businesses, which could collect about $45 million.

“It’s time to solve this budget crisis and give West Virginia businesses stability and predictability,” Steve Roberts, president of the West Virginia Chamber of Commerce, said in a statement posted on the governor’s website March 31.

Yet the Tax Foundation, a nonprofit tax policy group that opposes gross receipts taxes, strongly opposed the proposal.

The commercial activities tax is the most “economically destructive” policy among the governor’s proposals, according to Jared Walczak, an analyst at the Tax Foundation.

The tax would be imposed on business receipts, not on profits, and wouldn’t take into account the businesses ability to pay, Walczak told Bloomberg BNA in March.

Many Ideas

According to the West Virginia Center on Budget and Policy’s most recent budget brief, Justice would close the state’s budget gap by raising $450 million in new revenue, largely from increased sales and business taxes.

Some of the previous proposals from the governor have included:

  •  increasing the consumer sales tax to 6.25 percent from 6 percent to raise $50 million;
  •  levying a commercial activities tax of .00045 of 1 percent on businesses to raise $45 million;
  •  raising the pop tax by 2 cents per container to raise $30 million;
  •  raising the cigarette tax by 20 cents per pack to raise $20 million; and
  •  increasing the beer barrel tax to $8 from $5.50 to raise $3 million
“He just kept putting out proposals throughout the session,” Boettner said.

At this point, it is unknown which, if any, of Justice’s proposals will make it into the budget.

To contact the reporter on this story: Leslie A. Pappas in Philadelphia at LPappas@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Text of H.B. 2018 is at http://src.bna.com/nU5.

Text of S.B. 484 is at http://src.bna.com/nU7.

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