The Times West Virginian

West Virginia

March 10, 2011

Legislature approves food tax cut

CHARLESTON — West Virginia will knock another penny off its food tax July 1, after the Legislature approved a limited cut Wednesday amid a debate over a complete repeal.

The measure would reduce the sales tax rate on groceries from 3 cents to 2 cents per dollar spent. Expected to save taxpayers $26 million annually, supporters cite above-estimate general revenue collections to argue that state government can afford it. But the cut, and whether lawmakers should have gone farther, may play a role in the upcoming court-ordered special election for governor.

The Senate added the cut to a House-passed bill addressing taxes on durable medical goods, which it then returned to the House.

“Every citizen in the state will benefit from this,” said acting Senate President Jeff Kessler, D-Marshall, after that unanimous vote.

The House accepted that amendment 91-2, but only after minority Republicans were stymied from proposing to convert the cut into a complete repeal as of Dec. 31. House Speaker Rick Thompson cited precedent to block such a major change to a previously passed measure.

Thompson noted afterward that he’s repeatedly called for the tax’s repeal this session. He and other House Democrats have advocated a gradual, multiyear approach that would hinge on state government’s financial health.

“That’s how you do things appropriately,” Thompson, of Wayne County, said of his ruling. “It is a regressive tax. It needs to be taken off ... If we can just get a penny, then we’ll just take a penny.”

Delegates then voted 89-4 to send the bill to acting Gov. Earl Ray Tomblin, who had proposed the limited cut. Republicans Marty Gearheart of Mercer County and Eric Householder of Berkeley County, both freshmen, opposed passage along with Democrats Sam Cann of Harrison County and Harold Michael of Hardy County. The two Democrats had also voted against accepting the Senate amendment.

Heralding Wednesday’s passage, Tomblin noted that the proposal appeared dead just days ago.

“Average families were not going to share in our strong financial position,” Tomblin said. “It was a victory for those who too often lack a voice in Charleston.”

Tomblin had balked at cutting deeper than a percentage point. He argued instead that lawmakers revisit the tax next year. He said state finances, while stable, remain fragile as the economy slowly emerges from recession.

The tax cut bill introduced on his behalf missed a procedural deadline last week because of the House’s partisan debate over a gradual versus immediate repeal. Tomblin on Monday vowed to call a special session for a limited food tax cut, if one did not emerge from the regular session that ends midnight Saturday.

Tomblin also suggested he might veto a pending public employee pay raise measure in the absence of a food tax cut. Thompson criticized Tomblin’s talk of a veto option after Wednesday’s passage.

“I think it’s highly improper to use one piece of legislation to leverage another,” Thompson said. “That kind of trading is wrong.”

House Minority Leader Tim Armstead, meanwhile, denounced Thompson’s ruling that blocked the GOP repeal amendment.

The Kanawha County Republican cited how the pay raises, championed by Democrats, would increase general tax revenue and lottery-backed spending by around $70 million annually. Repealing the food tax would save consumers — and cost general revenue — around $75 million a year.

“It’s a disgrace,” Armstead said. “We are completely out of touch with what the people want.”

Armstead and other House Republicans disagreed with Thompson’s reading of the rules, and said they had the right to amend the Senate bill.

Tomblin, Thompson and Kessler are among the Democratic candidates in this year’s governor’s race. Sen. Clark Barnes and Delegate Mitch Carmichael, who also blasted Wednesday’s outcome, are part of the GOP field. With party primaries set for May 14, the special general election is Oct. 4.

West Virginia cut the food tax rate in half, from 6 percent, gradually over the past five years. A 2 percent rate would give West Virginia an edge over Virginia and its 2.5 percent tax, but its four other neighbors exempt groceries from sales taxes, according to the Federation of Tax Administrators.

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