Newspaper article Charleston Gazette Mail

BUDGET IMPASSE ; 1% Sales Tax Hike Mulled; Measure Seen as Long Shot

Newspaper article Charleston Gazette Mail

BUDGET IMPASSE ; 1% Sales Tax Hike Mulled; Measure Seen as Long Shot

Article excerpt

Countdown to shutdown W.Va. budget impasse: Day 81 Shutdown of government: In 29 days Special session: Day 12 Special session cost: $420,000* *Estimated

With a state government shutdown looming a month away, West Virginia's Senate Finance Committee spent Tuesday on a long-shot attempt to resurrect a 1 percent increase in the consumer sales tax. "I don't know if it's a Hail Mary, but it's definitely a long pass, Senate Finance Chairman Mike Hall, R-Putnam, said of the efforts to bring back a bill (SB 1003) that was immediately quashed by House and Senate leaders when the special session began on May 16. The bill was one of three revenue measures proposed by Gov. Earl Ray Tomblin.

Senate leaders brought it back after the defeat last week of a tobacco tax increase in the House of Delegates, and with the likelihood Tomblin will veto the Legislature's current 2016-17 budget plan - which heavily raids the state's Rainy Day emergency reserve funds to close a $270 million budget shortfall.

Hall said he's playing a hunch that voters would be more tolerant of a small, broad-based tax increase that affects all consumers, as opposed to the tobacco tax, which imposes a steep increase on a portion of Mountain State citizens.

"This seems to be at the top of the list of the man on the street trying to counsel us on what to do, Hall said.

A temporary 1 percent increase in the sales tax also would go further in closing the budget shortfall than the tobacco tax, raising $196 million in the 2016-17 budget year, and $214 million for each of the next two fiscal years, according to state Tax Department estimates.

Meanwhile, state Budget Office Director Mike McKown warned committee members that using Rainy Day and one-time funds to close the 2016-17 budget shortfall will only exacerbate future shortfalls, creating budget gaps of at least $380 million in fiscal 2018 and 2019.

Committee members delayed a vote on the bill until this morning in hopes of coming up with an amendment setting a trigger to repeal the 1 percent increase early if there is a strong upturn in the state economy before the proposed June 30, 2019, sunset date for the tax hike.

Given the long-shot nature of the bill, neither Hall nor Senate President Bill Cole, R-Mercer, were confident Tuesday that it could pass the Senate, let alone survive a House vote.

"Given the crisis that looms, part of the process of the Legislature is people becoming more aware of circumstances, Hall said.

Meanwhile, Bridget Lambert, of the West Virginia Retailers Association, said she's concerned about the impact a 1 percent sales tax increase could have on retailers in border counties.

On Tuesday, Deputy Revenue Secretary Mark Muchow said municipalities in Ohio border counties, as well as in Pittsburgh's Allegheny County, currently have 7 percent sales tax rates, while municipalities in Virginia have 6 percent sales taxes and a 2. …

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