As you may know, the West Virginia Legislature and Governor are required to pass a balanced budget each year. This has to be accomplished before July 1, each fiscal year. And, if you have not already heard, the hole in next year’s budget is estimated to be around $300 million.
Many attribute part of the shortfall to the decline in the energy markets, which in effect, has had an impact on business and personal income taxes, sales tax and the severance tax. Other energy sector states are facing the same reality. With the 2016 legislative session over and an understanding that the Legislature will need to convene in the spring to pass a balanced budget, there will be a lot on the table in terms of revenue producing measures and cuts.
So, how would you close the gap in West Virginia’s budget shortfall?
As aforementioned, there will be a lot on the table in terms of revenue producing measures and cuts. Before providing your ideas, keep in mind that we need a balanced approach. West Virginia cannot cut or tax its way into prosperity.
It is recognized that with significant cuts, comes significant layoffs, cuts in funding for services that assist West Virginians, and benefit reductions. It is presumed that with significant tax increases comes deterrence among individuals and businesses.
So, what ideas were suggested during the legislative session, but failed to become law?
While spending and budget cuts are still on the table, with respect to revenue measures, the tobacco tax was the first proposal. Proposals were made during the legislative session that would increase the tobacco tax, including a tax on e-cigarettes, anywhere from forty-five (45) cents to one (1) dollar.
Another proposed revenue measure was that any time gasoline falls below two (2) dollars a gallon, an additional three (3) cent tax increase will be imposed.
Sales Tax, DMV Fees, Vehicle Purchases
Other revenue measures included raising the state sales tax from six (6) percent to seven (7) percent, increases in various Department of Motor Vehicles fees, raising the state privilege tax on vehicle purchases from five (5) percent to six (6) percent, etc.
Sales Tax Exemption on Professional Services
Also, removal of the sales tax exemption on professional services, such as those provided by lawyers, accountants, engineers, media advertising, etc. was introduced. This bill was quickly tabled during the legislative session. Bringing back the food tax was never brought to the table.
How Would You Close the Gap?
As I stated above, the law prohibits West Virginia from running deficits and it must submit a balanced budget. Lawmakers will have difficult decisions to make in the coming months. However, the input of the citizens is what is most important. So, how would you close the gap in West Virginia’s budget shortfall? Looking forward to hearing from you!