Governor says he’ll compromise on tax plan, but expresses frustration that session could end with no deal

Gov. Jim Justice said he was doing a cannonball when he proposed a 50 percent personal income tax cut over three years, but the governor also says he’s willing to negotiate with senators who might have misgivings.

“We’d absolutely compromise,” Justice said during a radio town hall on MetroNews’ “Talkline.”

Justice has been on the road to promote his proposal of an initial 30 percent personal income tax cut, then 10 percent the following year and 10 percent the third year.

The House of Delegates overwhelmingly passed a bill reflecting the tax cut proposal a couple of weeks ago. The Senate’s Republican supermajority has been more deliberative.

Asked on the radio town hall about whether he would be willing to consider other incarnations of a tax cut — for example, a cut rolling out over a longer period of time or a 30 percent cut that would stand until it’s clear the state is on solid financial ground — the governor said he would be open to various possibilities.

“At least it gets us on a real pathway,” Justice said. “On this issue, I’m as easy as you can get.”

Justice has been in communities around West Virginia to drum up support for the income tax cut proposal. But he referenced weekly breakfast meetings with House and Senate leaders to discuss the tax proposal, noting that he has missed a couple because of illness and the tax town hall events.

More and more, Justice has expressed frustration with the Senate’s Republican majority, saying they’re taking too long to settle on a tax cut.

Asked about the possibility of the regular legislative session ending without an agreement, Justice said that’s a real possibility. Today is Day 22 of the 60-day regular session.

“That not only is the risk, that may be the strategy,” he said. “From the standpoint of what’s going on on the Senate side, it may actually be the strategy — which would be catastrophic to our people. But at the end of the day, we don’t have anything back from the Senate. The Senate says they’ve got a plan. Well, where’s the plan? Where’s the beef?”

A fiscal note  assessing the governor’s tax proposal 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 just shy of a billion 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.

Eric Tarr

Asked about the governor’s assertions, Senate Finance Chairman Eric Tarr, R-Putnam, said it’s important to carefully assess the effects of the tax proposal in years to come. He made reference to a long-term financial outlook that has not been produced the past few years. Senators would like to see it.

“It’s kind of surprising — surprising and not surprising because he’s not given a six-year plan. So either he doesn’t know what the expenditures are on the out years or he doesn’t care — and apparently the House doesn’t either because before they went through any of their budget hearings to figure out what the needs are in the state going forward, they went through and passed a billion-dollar reduction,” he said.

“So we can get a tax plan out and we will. Expediency is not the answer here — it’s a matter of getting it right. And media pressure and a Senate campaign by this governor is not going to force us to move in expedience and sacrifice getting this right. We want to get it right for the people of West Virginia so that it’s sustainable, it’s safe and it makes us economically competitive.”

As the gavel sounded on the Senate floor, Tarr said those safeguards have been disregarded by the governor. “So we’ll do what we need to do. We don’t need the governor in the process.”

Justice, in the radio town hall appearance, said he is confident that the proposal’s numbers work out. But he said it’s harder to navigate the personal relationships among the elected representatives who have to make the decision.

“The problem with this is personalities,” he said. “Politics. Just trying to hit at one another.”

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