CHARLESTON, W.Va. (AP) - Gov. Jim Justice’s call for small tax increases on both sales and business revenues got immediate pushback from key lawmakers.
Other proposals to limit sales tax exemptions and eventually end the state income tax found a warmer reception.
His major economic initiative - a highway construction program - would require 10-cent gas tax and $20 annual motor vehicle fee hikes to help seed $1.4 billion or more in bonding. Justice said the program could provide up to 48,000 construction jobs across the state. Voter bond approvals are needed.
The drivers behind his plans are an economy that has slumped along with coal mining and a projected $500 million state budget deficit.
“I ran for governor because I wanted to try to help,” Justice said Thursday. “But I didn’t create the mess.”
The 65-year-old owner of farms, coal mines and resorts took office in January following his first run for a state post. He isn’t taking the governor’s $150,000 salary.
Justice laid out his initiatives and first budget proposal in a Wednesday evening address in the Capitol’s House chamber. It was packed with lawmakers, other state officials and guests. His announced goal to make West Virginia the eighth state with no income tax received an ovation.
On a white board next to the podium, he wrote down fractions for two tax increases for the upcoming fiscal year that would raise about $300 million - 0.5 percent increase in the 6 percent sales tax and a business gross receipts tax of 0.2 percent. They could disappear in three years, he said.
The alternative is drastic spending cuts that he said would close state colleges, parks and various programs. Among $26.6 million in spending cuts he did propose was $4.6 million from West Virginia Public Broadcasting, which would eliminate its staff and programming. “I don’t like that either,” he said.
House Speaker Tim Armstead called the budget-balancing tax ideas disappointing. “We had hoped that this governor would live up to his campaign promises of restructuring government and not putting additional tax burdens on our citizens,” he said.
Senate President Mitch Carmichael said general tax increases face a difficult reception among legislators.
“I’m supportive of going to the voters with an initiative to build roads and infrastructure projects with the tax increases,” Carmichael said. “We really can find some common ground when we talk about eliminating the income tax, reforming our tax structure, perhaps raising some consumer sales tax - in other words a shift from taxing the productive elements of income to a tax on the consumption elements.”
Both Republican lawmakers last week raised the possibility of eliminating certain sales tax exemptions, which Justice proposed for an $88 million savings in the fiscal year starting July 1. A Senate committee is expected in the next few weeks to present proposals for tax reform.
Justice says he believes the highway projects, if approved, would drive economic growth and set the stage for removing the income tax. The graduated tax ranges from 3 percent to 6.5 percent.
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