Justice proposes three modest tax cuts and pay raises for state employees

Gov. Jim Justice’s administration¬† is proposing a general fund budget of $5.22 billion, a figure that includes a few proposed tax cuts along with spending increases such as pay raises for state workers.

The administration is setting a revenue estimate of $5.265 billion, an amount that the administration has been intentionally keeping low to hold state spending in check. By comparison, the revenue estimate for the current fiscal year is $4.88 billion.

Larry Pack

“Our revenues are strong again,” acting Revenue Secretary Larry Pack told reporters on Wednesday, the first day of the regular legislative session.

Pack characterized the budget proposal again meeting the governor’s cautious approach, avoiding the risk of going into deficit if revenues do not meet expense. It has enough cushion, he said, for one-time expenditures as the fiscal year progresses.

State officials are still assessing the financial effects of a 21.25 percent personal income tax cut that has gone into effect this year. Earlier this week, administration officials said personal income tax collections are down only 3 percent from the prior year, but they are keeping tabs on whether that remains that case as the year continues.

So that’s a major factor as state officials and lawmakers hammer out a general revenue budget for next fiscal year.

Nevertheless, the governor is ready to propose three additional, more modest tax cuts amounting to an estimated $49.7 million.

One is a state child and dependent care tax credit. The next would exclude Social Security benefits from the state income tax. And the third would expand the senior citizen homestead property tax cut.

“We’re hopeful the Legislature will agree and make these law as soon as possible,” Pack said.

The administration will support legislation to raise taxes on managed care organizations that carry out programs for Medicaid. That step is meant to counter millions of dollars in increased state costs for the Medicaid program, which is in partnership with the federal government.

The financial move could bring in $114 million to help meet the Medicaid gap. In addition, administration officials are proposing a $40.6 million supplemental expenditure for Medicaid.

Proposed spending increases include:

  • average 5 percent pay raises for state employees at a cost to the state of $123 million
  • a one-time $100 million allocation for Congressional earmarks and flood relief
  • a one-time $50 million expenditure for contract nursing services for state facilities
  • $21 million for Medicaid administrative costs and services related to the Children’s Health Insurance Program
  • $4.6 million for the Chief Medical Examiner’s Office
  • $30 million for tourism
  • $3 million for veterans
  • $42 million for the Public Employees Insurance Agency
  • $21 million for Corrections

The budget proposal sees a number of supplemental appropriations based on revenue over estimate for the current fiscal year.

Those one-time expenditures include $200 million for the School Building Authority, $53 million for two psychiatric hospitals, $30 million for the Nursing Workforce Expansion initiative, $10 million for the Posey Perry Emergency Food Fund and $5 million for a charter school seed fund.

For the coming fiscal year, additional surplus spending proposals include: $20 million for senior centers and programs, $5 million for the Military Ascend program to encourage veterans to reside in West Virginia, $1 million for various veterans home improvements and more.

Pack, who became the acting revenue secretary last month, felt confident about the proposal.

“The economy’s good,” he said, “and if the economy’s good revenues are going to be good.”





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