Gov. Joe Manchin isn’t moved by Republican pleas to whittle the base state tax West Virginians pay at the pumps, but he is looking at a possible change in the annual variable rate based on the wholesale price from July to October, an aide indicated Tuesday.
Republican lawmakers are trying to convince Manchin to lessen the tax bite taken by state government in an anticipated special legislative session this month.
“We understand the struggle that people are having with fuel prices,” communications director Lara Ramsburg said. “We sympathize with that. The problem is, No. 1, our gas tax is a very small piece of the price. And No. 2, the gas tax is what funds our road fund. We know that we have road needs in terms of maintenance and paving and things that need to be done. We have to have the ability to do that.”
Ramsburg said the governor is closely monitoring summer gas prices since it is in that four-month period that the variable component is computed. “We are concerned about that and we are watching that,” she said.
Motorists shell out 32.2 cents in state taxes per gallon, of which 20.5 cents is in the flat rate and the remaining 11.7 cents is based on the 5 percent of the average wholesale fuel prices.
“I’m disappointed they don’t see the need to address this issue,” House Minority Leader Tim Armstead, R-Kanawha, responded. “I think we all recognize this is an issue that’s going to take some action at all levels of government. I don’t pretend that state government can solve it. I do think it’s our responsibility in state government to do what we can to help the people who are struggling under this burden of gas prices.”
First off, Armstead said, the Republicans want to avert an automatic escalation in January through the variable component. If not, he said, this portion of the tax could go up another 5 cents. Any money the road fund is deprived by providing a tax cut could be made up by shifting money from the general revenue account — a move that admittedly would have to be done every year. This year, Armstead pointed out, the state witnessed a $290 million surplus.
“I’m hearing reports now between $150 million and $200 million this year, at least,” the GOP leader said. “I think we have to recognize this (gas prices) is a real crisis for the people in West Virginia. What better use of our funding than to try to alleviate the problem people are struggling under?”
Ramsburg said the issue needs to be put in the right perspective. “The gas tax is not what’s causing this (price) to be over $4,” she said.
“It’s a national issue that needs to be addressed on the national level, and we keep imploring for that. We also understand that market conditions, even if you might adjust the tax component, would probably make up that adjustment and you really wouldn’t see the savings you are looking for.”
One factor in transferring money from general revenue to the road fund is that the Legislature must be sure it has a sustainable flow of cash on a year-to-year basis before the gas tax is rolled back, Ramsburg said.
In this year’s regular session, finance leaders often cautioned that the state could be facing some difficult times a year or two from now.
“To make an adjustment that you can’t sustain would just cause us more problems in the end,” she said.
“We want to solve this issue as much as anybody else does. We understand the pain that everybody is feeling at the pump. We’re feeling it as a state government as well and as employees of state government. Taking off the tax is not going to solve your problem.”
Manchin froze the variable component by executive order, but that came after a national disaster, Hurricane Katrina, and didn’t entail market conditions, Ramsburg pointed out.
“We could do that because we were dealing with a natural disaster that caused the price to change, not because of market conditions,” she said.
“The problem today is we don’t have that as a reason. It’s market conditions. We do not have the ability to simply adjust the tax as we did back then. We’re not in the same scenario.”
While nothing it set in stone, the governor is expected to call a special session to dovetail with the June 22-24 interims session. The basic goal is to deal with financing the transfer of teachers from a 401(k)-style pension plan into the older system. The idea is to rescue between 25 and 75 enrollees whose paperwork didn’t arrive by the May 13 deadline.
Armstead was put off by Manchin’s initial response to the GOP proposal, advising the Republicans to get in touch with “their friends” in the big oil companies.
“A lot of people like to give sound bytes and point fingers at another level of government or private industry,” he said.
“It’s our responsibility to take action where we can. It’s getting to where it’s not just about whether we can take this vacation or that vacation. It’s how do we get to work? How do we continue to pay our other bills?”
