Gov. Jim Justice, on the road to promote a big personal income tax cut, says the proposal is two-thirds of the way toward passage.
One, he supports the tax cut. Two, the House has overwhelmingly passed a bill reflecting the cut. And now all eyes are on what the Senate might do.
“We’ve still got a third of the way to get there,” Justice said today during an appearance in Parkersburg. “I’m not here today to beat on the Senate.”
Still, the governor made it clear that he’d like senators to come on board too.
Many senators are skeptical that the governor’s plan to cut taxes balances with the state’s proposed spending. Senators say they support a significant tax cut for West Virginians, but it’s not yet clear what specific plan senators might agree on.
Talks are ongoing within the Senate’s 31-member Republican majority.
One floated possibility in the Senate has been an immediate 50 percent income tax cut, although additional details are unclear — like whether sales taxes would be increased as an offset or whether spending would be significantly curtailed to match the cut.
“There are a lot of discussions going on behind doors,” said Senator Eric Nelson, R-Kanawha, speaking on MetroNews’ “Talkline.”
“I can say without a doubt that our entire caucus is extremely in favor of giving something back to West Virginians. We do have some generous surpluses now but let’s make sure that if we do give something back that we’re not going to run into a problem down the road.”
Eric Nelson, WV State Senator (R-Kanawha), joins @HoppyKercheval to discuss Governor Jim Justice's proposed income tax plan. Where are we in regards to this plan? WATCH: https://t.co/yCFQ3nDJuy pic.twitter.com/Hyz6AeKlzd
— MetroNews (@WVMetroNews) January 25, 2023
A fiscal note assessing the bill concludes it would decrease General Revenue Fund collections by about $161.8 million in fiscal 2023, a little more than $1 billion million in fiscal 2024, $1.2 billion in fiscal 2025, and almost $1.5 billion in fiscal 2026.
Right now, West Virginia is running a budget surplus of hundreds of millions of dollars. But that’s based on several factors, including high energy prices that have produced high-performing severance tax returns and artificially-low state revenue projections that have enforced relatively “flat” budgets for several years in a row.
“I will be cautious. I am cautious,” Nelson said.
Senator Mike Oliverio, R-Monongalia, spoke in support of a 50 percent income tax cut during an interview after Wednesday’s floor session. “What a potential 50 percent cut in personal income tax could do is motivate somebody to pick up from somewhere else in the country and move to West Virginia,” Oliverio said.
But Oliverio acknowledged time will be necessary to determine the details of such a cut. “It’s going to require some financial gymnastics to be able to make that significant cut,” he said, noting that would be $1.25 billion in reduced revenue starting right away.
Senator Jason Barrett, R-Berkeley, also expressed openness to a big tax cut. But he also said the Senate should move carefully to get there.
“We’re absolutely committed to reducing taxes for the people of West Virginia. I don’t think we’re going to rush it through in just a handful of days. I think we’re going to go through the budget as presented by the governor to weigh tax cuts against some of the spending that he’s put in the surplus section of the budget.
“A lot of those things are actually-base building for future budgets. So we have to be mindful of the billion-plus dollars that he put in the surplus section of the budget. In the General Revenue portion of the budget, he’s asked for $248 million in spending above last year’s budget. Those are things that bring real concern when looking at doing a large tax cut.”
With 45 days remaining in the regular legislative session, Barrett said there’s still time to consider the tax cut options.
“We’re still working through that process, and I would expect us to over the next several weeks to make sure we get it right,” he said. “But we have constant communication with each other, and we’re vetting what we think is the best way to move forward.”