GOP leader: Prepare for massive cuts

CHARLESTON — Budget talk dominates much of the discussion about the upcoming legislative session.

After an hour and a half panel devoted to the topic — covered in Monday’s The Record Delta — Senate President Mitch Carmichael also met with journalists Friday at the West Virginia Legislative Lookahead and began his remarks with a look at the budget woes.

“The focus throughout the media and throughout the state really has been about the budget crisis we are experiencing in West Virginia,” he said. “We approach this legislative session with a pending $500 million shortfall.” 

Carmichael said the general revenue budget for the entire state of West Virginia is just a little over $4 billion.

Of that, roughly half is devoted to K-12 education, also a topic of Friday’s Lookahead session.

“When we talk about how we balance this structural hole in our budget — and I commend the governor for this who says we cannot tax the people of West Virginia any more — there has to be a structural long-term fix to this problem,” he said.

“We can’t stay away from cutting the things that have been sacred cows in the past,” he added. “We want to do it in the most compassionate, responsible, efficient manner to reduce the size of the state budget.”

The senate president said the legislature is expecting the governor will propose a minimum cut of $390 million, up to $600 million. 

“This Republican-led legislature will not leave this governor hanging out to dry with those cuts because it would be easy to do,” he said. “You could make a partisan game about this.

“We have called on the governor to make these cuts. He has said there will be cuts that will bring this government in line with these expected revenues and balance the budget like every family in West Virginia has to do to make some tough decisions. 

“We may make some suggestions of better ways to make the cuts, but in terms of significant cuts needed for West Virginia we will support the governor in this initiative.” 

However, Carmichael said he doesn’t think budget cuts alone are the answer.  

“I think that some of those cuts are going to get so deep and so hard that we may look at some rainy day funds as a temporary bridge,” he said. 

“There may be some limited very small revenue enhancements, but I think it will be so small as to be negligible.

“The manner in which we should balance this budget is going to be reductions so we fix this problem going forward. Do we really want to have to come back and do this again next year? We want to fix the long-term structural problem, and I think the way we do that and the governor said is with fundamental cuts to the budget.”

Carmichael also said there needs to be tax reform. He has appointed a select committee on tax reform to study the issue.

Some states have hiked their sales tax while doing away with income tax, according to Carmichael.

“You would eliminate the tax on the production of income and shift it to a consumption tax,” he said. “We are examining that option.”

“I’m certainly not saying this the only method to solving our a problem ­— a shift to a consumer sales tax and away from an income tax,” he added. “I’m saying it’s worthy of a study and it’s worthy of review and it’s ridiculous of us not to go down this path.”

Carmichael said West Virginia’s boom bust cycles in the fossil fuel industry are a historic problem.

“We need to get away from this reliance on our fossil fuel industry,” he said. 

But Carmichael feels there will still be a place for coal in West Virginia’s future because of its low cost. 

“It won’t be as prominent as it has been in the state,” he said. “However, I think the future is brighter than the present. There will be a slight resurgence in the coal industry with a new national administration. 

“People want to talk about the fossil fuel industry and how bad it is. Low cost energy has been one of the greatest things that has happened to move forward the standard of living for mankind, not just West Virginia.”

Carmichael alluded to four pillars of economic growth to diversify the economy: regulatory, tax, education and civil justice reforms. 

“We are aggressively pursuing the regulatory schemes in West Virginia that prevent growth and opportunity because several independent entities have ranked West Virginia as the most onerous, burdensome, regulatory scheme of any state in America. So, at the end of this legislature, that will not be the case. We will be on the list of being the most reform minded reasonable regulatory scheme in America.”

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