Justice pushes for pay raises, Social Security tax break as session nears conclusion

Gov. Jim Justice in his annual State of the State address urged West Virginia lawmakers to provide pay raises for public employees and to eliminate state taxes on Social Security benefits.

As the legislative session nears its conclusion, each of those is unsettled — particularly in the state Senate. The governor, during a news briefing today, urged lawmakers to accomplish the goals he set.

Gov. Jim Justice

“I hope the Senate can somehow get through all this muckety-muck and making things just so complicated and difficult and everything and get on board with what I presented and what the House is doing — and we can move on and help out a bunch of folks in West Virginia,” Justice said today.

The governor characterized the Senate as unclear, while the House of Delegates has moved ahead with slightly-altered versions of his proposals.

“The House has stood rock solid for our pay raises. The House has stood rock solid on the tax cuts. The Senate’s still thinkin’ about it. There’s no point in casting stones. I hope to goodness that they’ll come along and we’ll be able to give our pay raises to our folks and we’ll be able to give our tax cuts to our folks as well,” he said.

The House of Delegates on Tuesday passed a $4.99 billion budget that includes raises for state employees and a phase-out of state taxes on Social Security. Justice’s proposal would have eliminated the Social Security taxes, but the House’s version would phase out the taxes over three years.

The House’s budget framework, which was amended into a Senate bill, next goes to the Senate.

There, the Senate Finance Committee on Tuesday amended the Social Security tax cut bill, tying the elimination of that tax to a trigger already in place that could, more broadly, lower personal income taxes. Basically, if the trigger doesn’t broadly reduce income taxes, then the full Social Security tax would be wiped away. If the trigger is maxed out, then there would be no specific break for Social Security.

On Wednesday afternoon, the Senate took a pay raise bill and hooked it to the trigger on the personal income tax too. If the trigger is hit and prompts a tax cut, no raises. If the trigger is not hit, there would be pay raises averaging 4 percent.

Eric Tarr

Earlier in the week, Senate Finance Chairman Eric Tarr said the potential increased cost to the state could be in conflict with other financial pressures.

Those include last year’s 21.25% personal income tax cuts, with an upcoming trigger to reduce income taxes even more could amount to as much as $257 million and  a $465 million obligation to the federal government that is the subject of current negotiations.

“So there’s a lot of variables out there right now that you want to err on the side of caution on your spending growth,” Tarr said this week on MetroNews’ “Talkline.”

Justice focused more of his comments today on the pay raise issue.

“Who out there, who in the world, doesn’t really believe that absolutely we should give our pay raises to our teachers, our service personnel, our folks who work really hard for this great state all along. We can do it, we can afford it absolutely without any movement. We can absolutely do it,” Justice said.

State allocators are expressing caution over a $465 million obligation to the federal government. That is a question of whether the state fell short on a requirement to maintain financial support for education at levels in line with overall spending after school systems accepted federal covid relief dollars.

Guidance released in April, 2021, specifies that if a state fails to meet requirements, then federal officials could seek recovery of funds, commonly described as a “clawback.”

Lawmakers are avoiding commitments on spending that could come through surplus funds at the end of the fiscal year because of the potential uncertainty. Priorities for potential surplus spending are usually a routine part of the budgeting process, so there’s already open talk of a special session in May to, at least, circle back to that.

Justice today acknowledged the possibility of a May special session but seemed to be saying those allocation decisions could actually be made right now.

“I think everybody wants to lay the stuff aside, come back in May, see where we really stand,” he said. “I think I know where we’re going to stand, but if we want to come back in May with one-time dollars, with surplus dollars and work again back in May, I guess, you know, I guess that’ll be fine.”

 

 





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