Frankly, the media missed the boat on this one, myself included, since the primary focus of the legislation was to encourage investments in Marcellus Shale development, particularly including incentives to recruit one of those elusive cracker plants. (What -- you expect me to read fine print with these eyes?)
And the bill (SB465) had good bona fides, with Sen. Brooks McCabe, D-Kanawha, as lead sponsor, and the other sponsors reading like a who's who of Senate leadership: Jeff Kessler, Richard Browning, John Unger, Herb Snyder, Ron Stollings, Robert Plymale, Erik Wells, Corey Palumbo, Bob Beach, Orphy Klempa, Jack Yost, and Dan Foster.
Nor did the House provide any checks or balances, passing the bill 95-4 and sending it to the then-acting governor.
The fiscal note from the Tax Department, which should have raised red flags, put the fiscal impact of the legislation at $0, noting: "Provisions related to tax credits for alternative fuel vehicles would result in some decrease in revenue. However, the Tax Department does not have sufficient data to accurately estimate such decline."
To its credit, the Tomblin administration backed legislation passed this session (SB185) limiting the tax credit to vehicles powered by natural gas or liquid propane only, and the fiscal note indicates that will provide an additional $10 million a year of revenue.
From the state's perspective, not only are hybrid vehicle owners cheating the state by not paying their fair share of the gas tax, but also the state essentially subsidized their vehicle purchases.
Finally, state tax collections for the 2012-13 budget year came in $90 million below estimates -- balanced by emptying a $45 million Income Tax Reserve Fund and by imposing spending cuts.
That $90 million sounded a lot like the amount of tax cuts the Legislature has enacted recently, including another one percent cut in phase-out of the food tax last year, for $30 million.
To verify that the budget deficit was effectively self-inflicted, I checked in with Ted Boettner with the West Virginia Center on Budget and Policy -- an organization whose unofficial motto might be, no tax cut is ever justified.
Boettner's numbers confirmed what I thought, that cuts in the food tax, corporate net and business franchise tax alone accounted for more than $110 million in lost tax revenue.
As Boettner noted, the state collected more business taxes in 1999 than it did in 2013.Reach Phil Kabler at ph...@wvgazette.com or 304-348-1220.