A special session of the West Virginia Legislature begins today in Charleston with a fair amount of uncertainty.
Governor Jim Justice desperately wants to tack on another five percentage point reduction in the state income tax rates. That would be a crowning achievement for the popular governor, who is favored to win election in November in the race to succeed U.S. Senator Joe Manchin.
Plus, another five percent cut would make the total rate cut 30 percent since 2023 and continue the state on the path toward eliminating the tax entirely, which Justice believes is an economic growth winner.
“I’ve said it time and time again; nothing will help our population grow, create new opportunities, and drive economic progress in West Virginia like eliminating our personal income tax,” Justice said when issuing the calling for the session.
Well, the governor is half right. He has pushed “time and time again” for taking the state income tax to zero. However, his declaration that nothing will have the economic heft of a tax cut is questionable.
In reality, a number of factors contribute to economic growth and the willingness of individuals to move to a particular state: Job opportunities, the cost of living, infrastructure, the quality of the education system, crime rates, political stability, climate, recreational opportunities. West Virginia does well in some of those categories, but certainly not all. Taxes are only one part of the equation.
Also, West Virginia depends heavily on the income tax to pay for services that are either required by law or that people demand. This fiscal year, that state income tax will account for $2 billion of the $5.3 billion general revenue budget.
Justice’s additional five percent tax cut would save taxpayers another $110 million, but it would put additional stress on a state budget which has been the beneficiary of a historic influx of federal dollars. That federal money is drying up, and lawmakers have been warned that the hefty budget surpluses of the last few years are disappearing.
The politics of the proposed tax cut are notable. Republican Attorney General Patrick Morrisey, who is leading in the race to be the next governor, has said repeatedly that any talk of an additional tax cut should be put off until next year when a new administration takes office.
Morrisey has overwhelming support from the Republican super majorities in the Senate and House of Delegates. They expect to be working with Morrisey in a matter of months, while Justice will be out of the governor’s office.
We will find out during this special session whether a majority of legislators want to give Justice a farewell gift or whether they are already thinking about how to work with the next governor.