Gov. Jim Justice celebrated a broad-based tax cut today, signing the bill at the state Culture Center while surrounded by supporters as balloons dropped all around them.
State officials have estimated the overall financial impact of the tax bill is $695 million in fiscal 2024 and $817.8 million upon full implementation.
“Great day. That’s all there is to it,” Justice said this morning on MetroNews’ “Talkline.”
What is @WVGovernor's reaction and thoughts ahead of signing the tax cut bill today? How beneficial will this bill be for West Virginians? He discusses the importance of the bill with @HoppyKercheval. WATCH: https://t.co/yCFQ3nDJuy pic.twitter.com/U7FsmpCf8m
— MetroNews (@WVMetroNews) March 7, 2023
Early in the regular legislative session, the governor and the House majority advocated for a straight 50 percent income tax reduction over three years. Early on, senators advocated for a more cautious, broader approach — with Senate leaders and the governor demonstrating particular friction for a while.
“I believe we don’t get it across the finish line at all without the team,” Justice said at a ceremonial bill signing ceremony today.
The main aspect of thefinal tax cut policy is an initial 21.25 percent income tax cut. That is a bit more than one backed by senators a few weeks ago and a bit less than one previously supported by the governor and delegates.
“My plan was a 30-10-10 plan. Well, we’ve got 21 and a quarter; that’s not quite 30, but it’s dadgum good,” Justice said today.
The income tax cut could increase in a few years because of a formula serving as a trigger. It would measure general revenue collections in a fiscal year minus severance collections compared to 2019 as a base year. If collections are ahead of the base year, that would activate the trigger.
Reductions wouldn’t exceed 10 percent at a time. The trigger system would go into effect in 2024.
“So basically what we’ve got is the pathway to zero, not a pathway to 50 percent,” Justice said. “It’s so good, it’s off the chart.”
The revised bill also includes a personal property tax credit for vehicles. There’s also a 50 percent personal property tax break aimed at small businesses, which are refined through definitions in the bill. Also, there’s a tax credit for disabled veterans on personal income taxes on a homestead.
“After years of fiscal responsibility, the right thing for policymakers to do is provide much needed relief to our citizens. Because of the tireless work of Governor Justice and principled leaders in the House and Senate, our State is finally on the verge of doing just that,” said Jason Huffman, state director for Americans for Prosperity-West Virginia.
“This historic tax cut, once it completes legislative action, represents a good start. With this framework in place, we will look forward to continuing to work with policymakers to provide West Virginians with additional transformational tax relief.”
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 the likely stimulus of federal dollars. Revenue projections have also been held artificially low, keeping the base budget under control but leading to more reliance on surplus spending.
The West Virginia Center on Budget & Policy think tank released a statement concluding that the tax cuts are “a house of cards that is about to fall.”
“These permanent tax cuts for the wealthy rely on underfunded public services, temporarily high energy prices, and one-time federal COVID-19 relief funding,” the organization stated.
“When these factors subside, state lawmakers will find themselves in an untenable situation, forced to either further slash a budget that’s already been cut to the bone or raise other taxes–usually sales and property taxes, which hit poorer workers, families, and communities harder than wealthier ones.”