West Virginia legislative leaders want to hear more about Gov. Jim Justice’s proposal to lower personal income taxes by another 5% — but they also say that tax cut proposal needs to be weighed against other financial pressures.
“We’re anxious to see the governor’s plan,” House Speaker Roger Hanshaw, R-Clay, said today on MetroNews’ “Talkline.”
“We’ll be happy to take a look at it and consider it, just as I said we would when he made the announcement, just as I said we would a couple of different times over the course of the intervening weeks. We’ll be anxious to consider any plan the governor wants to send us.”
Justice first called for the 5% reduction on July 1, the start of a new fiscal year, catching legislative leaders by surprise. Weeks passed, and now Justice says he will make an announcement Monday about a special session that he intends to call later this month.
“For crying out loud, the Legislature — truly, we’ve had plenty of time; plenty of time to work out our differences with regard to a potential tax cut,” Justice said during a Wednesday administration briefing.
Lawmakers have generally expressed caution about the governor’s 5% tax cut proposal because other tax cuts are still going into effect and because there are additional spending commitments also still going into effect — like the continued rollout of the Third Grade Success Act and estimated additional costs for more Hope Scholarship enrollment.
The state instituted a 21.25% personal income tax cut this year in a package that included further automatic reductions under certain economic conditions.
West Virginia hit those economic conditions, which triggered an additional 4% personal income tax cut to go into effect.
Justice wants another 5% on top of that.
“If we want to do more than that, just tell me how we can do it,” Justice said. “But I’ve given Toby and Edith my word — the voters. I’ve given them my word that I’m going to propose that and call people back into special session.”
He suggested the alternative for lawmakers is “hoarding this money and keeping it for pet projects or whatever it may be down the road. I don’t think it’s a good idea. I don’t believe in my heart that everyone wants to do that. Let’s come up with something that is absolutely good for our people.”
Hanshaw said there are additional reasons to gather in special session, such as allocations for infrastructure or proposals surrounding childcare needs. He said whether the state can afford another tax cut is to be determined.
“If you ask any West Virginian, do you favor additional tax cuts — well sure, so do I,” Hanshaw said. “But we have to be responsible about that.
“We’ll see an additional tax cut this year as a result of how the economy’s done here in West Virginia, and that’s a good thing. That’s exactly how we meant that to work. We’re happy about that. Will we consider additional tax cuts? Sure, but we just need to see a plan for it.”
Senate Finance Chairman Eric Tarr, R-Putnam, also said he would like to see a plan with more specific detail.
“As far as actually having a functional proposal in front of the Legislature for us to review and for our leadership to even talk to our caucuses about, that’s something that we’ve not seen from the governor,” Tarr said on “Talkline.”
He said lawmakers have been enthusiastic about tax cuts, “but we’ve done it in a very pragmatic, practical way that keeps the operations of state government safe so that we can go ahead and continue to grow the state like we’ve been doing, continue to attract business to the state, make it to where we’ve got stronger families in West Virginia.”
However, Tarr described concern that “the level of additional tax cut he’s proposing without offsetting that with a revenue swap of some sort or reducing spending that would accommodate the extra $110 million he’s proposing, that’s risky.”
The governor has consistently described calling lawmakers into a special session in August or September. Officials usually like to call special sessions at the same time legislative interim meetings are already scheduled because lawmakers already have plans to gather in Charleston and there is also usually no additional cost. But the August interim meetings came and went. And for the September interim meetings lawmakers are scheduled to gather in Parkersburg, starting this Sunday.
In any case, the governor described this special session as occurring before the end of this month, although he hasn’t yet specified dates. The next interim meetings in Charleston are scheduled for Oct. 6-8.
Tarr expressed surprise that the governor intends to introduce another tax cut to be dealt with in short order when consensus is not clear.
“It takes time to come in on a special session, really right before an election, and take on something that big. Yeah, it surprises me that he would take this tactic.”
Kelly Allen, executive director of the left-leaning West Virginia Center on Budget & Policy think tank, said the additional 5% tax cut doesn’t add up.
“Governor Justice’s demand for more tax cuts flies in the face of fiscal responsibility and lawmakers should reject it,” Allen said.
“The state is facing slowing revenue collections, already enacted tax cuts still yet to be phased in, and a myriad of unmet needs that must be addressed and assessed prior to more tax cuts that mostly benefit the wealthy.”