State Chamber boss thinks lawmakers will find a way to limit new taxes
By Chris Dickerson, February 24, 2017
CHARLESTON – During his gubernatorial campaign, Jim Justice frequently said West Virginians were taxed enough.
But when confronted with a looming $500 deficit in next year’s budget, Justice unveiled a budget proposal featuring $450 million in new taxes during his first State of the State speech earlier this month.
More than half of those tax increases would directly affect businesses, according to West Virginia Chamber of Commerce President Steve Roberts.
Still, Roberts is optimistic legislative leaders will strike a balance that works.
Justice’s tax proposals include a 0.5 percent increase in the consumer sales tax, a new 0.2 percent Commercial Activities Tax (similar to the old state B&O tax that was eliminated in 1987), an increase of 10 cents per gallon on the gasoline tax, higher taxes on beer and liquor and the end of sales tax exemptions for professional services and advertising.
Justice’s staff estimates $214 million would come from the new Commercial Activities Tax, $92 million from the bump in the sales tax and $88 million in the elimination of those sales tax exemptions.
“We have a lot of confidence in the legislative leadership,” Roberts said. “These are people looking forward to doing the right things. They are working collaboratively with anyone willing to work with them. We’ve met with them several times to give them our thoughts.
“And while I tend to be an optimist anyway, I think they are looking at the right things.”
Roberts said Justice proposed these tax and fee increases, but he hasn’t really said what can be cut.
“We just have a little trouble accepting that there is no place to cut,” Roberts said. “We think there are a dozen places to cut. Now, we don’t want to see state government cut to where it can’t function, but there are things that we find difficult to justify and explain.”
Roberts mentioned the number of cars in the state fleet and a higher number of state government employees per capita than other states while we are losing businesses and population.
“For example, we have fewer students but more spending in education,” Roberts said. “But we can’t honestly say schools are better because of it.
“What we think is that somebody has got to do the hard work of crawling into the bureaucracy and asking the hard questions.”
Roberts said he does like some of what Justice has proposed.
“We like his ideas for promoting the state and about economic expansion,” he said. “But the approach can’t be filling this budget deficit 95 percent of the way with tax increases and 5 percent with cuts.
“They haven’t taken a look at where they can save. We ought to collect what is owed. There are a lot of uncollected taxes.
“Plus, his tax bills have just now made it to the Legislature, and we are about to start the third week of an eight-week session.”
Despite all of that, Roberts said he remains optimistic something will be worked out.
“I’m not giving up on where this is all headed,” he said. “Members of the Legislature and others have seen the rate of spending is higher than it should be. Declining population and fewer businesses … that’s not a formula for success. But, we’ve seen it for a long time.
“Democrats before have proposed raising the sales tax. Economic experts say it’s the fastest and safest way to do it. And it can be temporary. This is probably a temporary crisis. A net of 7,000 new jobs were created in 2016. We think that number will continue into 2017, and the national economy is improving. That by itself will do a lot to lift the economy in West Virginia.”
Roberts has confidence in the legislative leaders to right the ship.
“I think the Legislature is pretty determined to strut its stuff a little bit and show its expertise to find where some cuts can occur, and they probably will have to balance those with tax increases,” he said. “We suggested a plan that includes making up the deficit with 1/3 cuts, 1/3 taxes and 1/3 fee increases.
“In the end, we are trying to create jobs. We are losing businesses to surrounding states. We’ve lost several in the last year or so. We’ve lowered our taxes, but we still don’t have low business taxes.
“People and businesses will put up with a lot if they knew it is going to be temporary. While Gov. Justice proposed these taxes as temporary, his staff has done analyses for long-term … for more than the three years he proposed.”
Roberts did say the new Commercial Activities Tax proposal is “scary.”
“That’s the last thing in the world we thought would be proposed,” he said. “We got rid of it because it was a tax that was hurting our ability to even keep businesses in West Virginia. We were hemorrhaging jobs and businesses. Business wants to do its fair share, but this tax would tax businesses whether they’re profitable or not.
“Businesspeople are savvy. To pay their people, pay insurance costs, provide goods and services they have to do it at a minimum of breaking even. This tax might really hurt them. Ohio has one, but they have no corporate net income tax. We have one, and he wants to add this on. We are very concerned.”
Still, Roberts said he thinks something palatable will be worked out.
“All in all, I think the greater likelihood is that the governor and the Legislature will sit down and come up with a deal,” he said. “It’s a very solvable problem, but it’s going to take compromise.”
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On Feb. 23, Justice asked lawmakers to pass a bill that would allow him to furlough in the event of a fiscal emergency.
And on Feb. 24, he sent lawmakers a bill to limit lawmaker pay to a total of five work days for any special session dealing with the budget.
The pay cap bill would fulfill a campaign promise. Last year, the state Legislature spent $ 35,000 a day on a budget special session.
"Our lawmakers wasted $600,000 last year because they couldn't come together to pass a budget on time," Justice said. "We've got to be more responsible than that. If it takes the Legislature umpteen weeks to pass a budget they won't get paid beyond five days under my plan.
"The people of West Virginia expect action to fix the budget crisis, and the pay cap will ensure we aren't wasting time and money to do the job we were all elected to do."
All members of the House and Senate receive $150 per day for regular, extended or special sessions. Justice's bill would mean that the most a member of the Legislature can make would be $750 for a special session on the budget.
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State Republican Party Chairman Conrad Lucas continues to hammer Justice, saying his companies owe at least $4.5 million in taxes to the state.
"That doesn't include his fines, taxes and penalties in several other states," Lucas said. "He asked our taxpayers for $450 million. One man – one man alone – is responsible for 1 percent of what he's asking the other 99 percent of West Virginians to pay.
"This is a man clearly afraid to face the real men and women who elected him by placing their hope into his false promises. Instead of working to cut state government, he sent a budget that is at least $318 million larger than last year. That's a dangerously unserious approach to real problems."
Lucas said the Legislature will work to protect "the 99 percent of West Virginians who do pay their taxes."
"Our team represents that 99 percent," he said. "West Virginia's comeback story starts with cutting the government that chokes our citizens, not making it fatter.
"Jim Justice sits on a massive throne of lies."