Governor Jim Justice and Senate President Craig Blair are headed for a showdown—or maybe a compromise—this special session on tax relief.
Justice’s plan is straight forward—a roughly ten percent reduction in personal income tax that would save taxpayers about $250 million. Justice sees the reduction as a start toward the eventual elimination of the personal income tax.
Blair’s plan is more expansive. Here are key elements of that:
—Elimination of taxes on six categories* of personal property, including business machinery and inventory and vehicles.
—Creation of a special revenue account for an annual appropriation by the Legislature to backfill counties for the property tax revenue they would lose.
—An increase in the replacement revenue for all counties with a floor of at least $1 million for smaller counties.
—A refund to taxpayers for their 2021 personal property tax on their vehicles, which could total as much as $140 million.
—An incremental reduction in the personal income tax if/when sales tax collections increase to a certain level.
—An increase in the minimum retirement payments to $1,000 a month for state retirees who are at least 70, have 25 or more years of employment, and now receive less than that.
—A one-time payment of $1,500 to state retirees who are at least 70, worked 20 or more years for the state and currently receive less than $1,000 a month.
Blair estimates the cost of the increase in the retirement benefits at $26.5 million. The cost of the rest of the tax plan is much higher, somewhere in the $500 to $600 million range. The Senate President said on Talkline Tuesday that projected economic growth combined with holding the line on state spending will cover the costs.
All of Blair’s plan is dependent upon voters approving Amendment Two in November. The Property Tax Modernization Amendment would change the state Constitution and allow the Legislature to exempt business machinery and inventory, as well as motor vehicles, from the personal property tax.
Justice and Blair are both passionate about cutting taxes, but they have different ideas for how to return surplus dollars to taxpayers. Frankly, that is a good problem to have, and one way or another, taxes are going to get cut.
What must happen now is Justice and Blair, two headstrong individuals, must find a common pathway forward.
*(Machinery and equipment, furniture and fixtures, leasehold investments, computer equipment, inventory, vehicles.)