Gov. Earl Ray Tomblin said Wednesday he's not impressed with legislative proposals to balance the 2016-17 budget - particularly the House of Delegates' plan to sweep unexpended funds out of agency accounts, and take more than $31 million from the state's Rainy Day reserve fund, to close about $104 million of the state's upcoming budget shortfall.
"To build an annual budget on basically one-time revenues is not wise at all," said Tomblin. "The only thing that will do is mean we'd have the same deficits or more showing up in the 2018 budget."
As required under the West Virginia Constitution, Tomblin will extend the 2016 regular session through Tuesday for work on the budget bill - but reiterated Wednesday he's not inclined to further extend the budget session beyond Tuesday unless the Legislature is making real progress on a compromise.
At the moment, the House and Senate versions of the budget bill are far apart. The Senate bill (SB 269) assumes that a tobacco tax increase will raise $115 million and elimination of greyhound racing subsidies will free up another $20 million. There's little likelihood the House would pass either bill.
If the Legislature goes home without a 2016-17 budget, Tomblin said, he would want to be sure there is agreement on a compromise plan before calling legislators into special session to complete work on the budget bill.
Tomblin, a longtime Senate Finance chairman and Senate president, said there are only two real options to deal with the budget shortfall: "You can raise taxes or fees, or you can cut spending."
And he noted that budgets for most state agencies have been cut by 20 percent over the past three years: "It's cut pretty lean."
He suggested that if the Legislature chooses to balance the budget through additional cuts, it should look at eliminating particular programs or services rather than making more across-the-board budget reductions.
Tomblin said many agencies have been cut to the point where they're struggling to provide mandated services.
In fact, he said many agencies are relying on the reappropriated accounts to soften the impact of those cuts, and could be further damaged under the House proposal to sweep nearly $73 million out of those accounts.
At the start of the session, Tomblin proposed two tax measures to raise revenue: An increase in tobacco taxes, including a 45-cent a pack increase in cigarette taxes, to raise $78 million a year, and eliminating the state sales tax exemption for telecommunications services to raise another $60 million.
The Senate passed the tobacco tax on a 26-6 vote, after upping the cigarette tax to $1 a pack to raise $115 million a year (SB 420). However, the House Finance Committee rejected the bill on a 21-3 vote.
Neither house acted on the telecommunications tax.
House Finance Chairman Eric Nelson, R-Kanawha, noted that the committee also attempted to raise revenue by broadening the sales tax base by eliminating a number of exemptions for professional and other services, but said that proposal also lacked bipartisan support.
"We have what I think is a very sound budget," Nelson said Wednesday. "It does contain some additional cuts over and above what the governor proposed, nothing that I would say are draconian or drastic."
He added, "I'm pretty confident in where we stand right now, but time will tell."
The Legislature has not adjourned a regular session without passage of the budget bill since 2009. That year, legislators adjourned and returned to Charleston in special session six weeks later, in part, to get a better idea of how much federal stimulus funding the state would be receiving that year.
Staff writer David Gutman contributed to this article. Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220, or follow @PhilKabler on Twitter.