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West Virginia State capitol building in Charleston. (Image: Noel Benadom via Flickr)
West Virginia State capitol building in Charleston. (Image: Noel Benadom via Flickr)

West Virginia revenue worsening, lawmakers leave without budget

CHARLESTON, W.Va. (AP) — With worse-than-expected drops in coal and natural gas tax money, West Virginia lawmakers have finished a budget session without hashing out a new spending plan.

Whether to hike taxes or not still persists as the key divide.

In a news release Tuesday, Democratic Gov. Earl Ray Tomblin announced he was sending lawmakers home and will bring them back later this spring. The new budget year starts July 1.

After finishing the regular 60-day lawmaking session Saturday, the Republican-led Legislature returned Monday to negotiate a budget with a gap initially pegged at $466 million, largely due to downturns in the coal industry and low natural gas prices.

On Tuesday, Revenue Secretary Bob Kiss told a legislative budget panel that revenues would be $92.4 million less than expected to draw up the budget. A message from Tomblin attributed the drop to “downward trends in personal income tax and consumer sales tax collections, downward pressure on energy prices, and less economic growth than originally forecast for the national and state economy.”

Lawmakers were already split on the budget — the House wanted to tap agency accounts and reserves, while the Senate passed plans to raise taxes. Now, they have to bridge about $238 million in remaining areas of disagreement to make the budget balance, as required. They can raise taxes, cut agencies further, or tap one-time cash, Kiss said.

“Whatever that solution is, it’s not going to be simple and painless,” Kiss said.

The House budget would use $32 million from Rainy Day Fund reserves, $17 million in extra cuts and $72 million from agency accounts.

The Democratic governor has opposed passing a budget that hinges on reserves. His pushes for higher taxes on tobacco products, e-cigarettes, and landline and cellphone use died in the Legislature.

“Certainly, if we’re going to fashion a solution that uses one-time money, he would obviously prefer that it be one-time money other than the Rainy Day,” Kiss said.

Senate Finance Chairman Mike Hall, R-Putnam, said he believes tapping into those reserves would be fine if there’s a blueprint to give West Virginia a more stable source of money than fluctuating severance taxes on coal and natural gas.

Once Rainy Day funds drop to a certain level, there’s a chance that it could reflect poorly on bond ratings.

Hall said he hopes to have a budget by the middle of April.

“If we have to fill it in with the savings account for a year, but it’s known what our plan is, that’ll be OK,” Hall said.

Senators proposed $115 million through higher tobacco taxes and $20 million by eliminating greyhound racing subsidies not approved by the House.

The governor could call on lawmakers to rethink those tax increases, or consider other ways to yield more money.

Tomblin doesn’t want to bring them back into session until there’s some agreement on a solution, Kiss said.

In related news, With coal and gas down, West Virginia faces budget quandary.

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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