Gov. Jim Justice expressed optimism that an additional personal income tax cut that he’s been pushing for weeks could still be embraced by the state Legislature.
Lawmakers went into a special session called by the governor on Monday but adjourned until this coming Sunday without taking up his tax cut proposal. Many lawmakers have expressed caution about whether the state is in solid enough financial shape at this time to absorb the additional cut.
This tax cut would be on top of a 21.25% income tax cut that just went into effect, plus another 4% tax cut that will occur automatically because the state hit an economic trigger. Justice has called for 5% more, although today he said the particular figure doesn’t matter as much as the state demonstrating that it’s steadily whittling away the income tax.
“What we need to do – the 5% isn’t do-all, end-all. What we need to do is continue to show the world that West Virginia is on the pathway to getting rid of the personal income tax,” Justice said in response to a question by WOWK-TV political reporter Mark Curtis.
“If we do 5%, we’ll be at 30. If we do 3%, we’ll be at 28. Who cares. Who in the world cares about that? We need to absolutely show the world that West Virginia is on the way to getting rid of your personal income tax.”
The governor added, “From the standpoint of the legislators, I salute what they’re doing and I understand their concern.”
The additional 5% personal income tax cut is estimated to equate to about $110 million that would not be available to pay for the expenses of state government.
Today, one day after lawmakers adjourned without a decision on the tax cut, state officials released new monthly financial figures showing the flow of state revenue remains fairly flat.
The governor, in his briefing, said the September collections were $14.3 million above the estimate set by Justice’s own administration.
For the first three months of the current fiscal year, state government is $1.189 million above estimate.
“You know, we started out kind of rough in July and August and we drifted to where we were underwater by $10 million or $11 million, something like that. We’re back above water now,” Justice said.
Asked by Ogden Newspapers reporter Steven Allen Adams whether he has concerns about the relatively flat revenue so far versus perceptions of the state’s ability to absorb another tax cut, Justice responded “Of course I do.”
The governor went on to say, “Does the fact that we’re not bringing in $100 million a month of surplus dollars — does that not get on your radar screen, Justice? Well, of course it does.”
He then went on to say the choice now belongs to lawmakers. “If the legislators say to the voters who are hurting in regard to inflation ‘We don’t want to do a tax cut,’ I’m OK. I’m OK. I’m just trying to do my job.”
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.
House Speaker Roger Hanshaw, R-Clay, today said lawmakers have been gathering and considering additional information about whether the additional tax cut is responsible.
“One of the things that we’re looking pretty carefully at is to what extent do we need to look for offsets in the budget, or how else can we reduce spending somewhere across the government to account for the $100-ish million we need to do that tax cut,” Hanshaw said today on MetroNews’ “Talkline.”
He added, “Could we snap our fingers today and do that tax cut today? Sure. But I’m not so certain we’re in a posture that we can sustain that two or three years from now. We want to make sure we are before we begin to take votes on anything.”
Hanshaw said the current proposal from the governor does not specifically suggest any offsets to demonstrate the tax cut would be affordable. The speaker said identifying such an offset should be the administration’s responsibility.
“We have to look for leadership from the executive in terms of identifying where offsets would come from within the executive branch.”
Hanshaw said lawmakers are aware that recent state revenue figures have been pretty flat.
“And that’s one of the reasons why I say we’re we’re particularly interested in whether they are offsets to be found across the government,” he said. “We are keenly aware of that number.”
Kelly Allen, executive director of the West Virginia Center on Budget & Policy think tank, said the state revenue trends don’t justify another tax cut. She compared the recent figures to prior-year collections.
“September’s revenue report shows that we are still learning the full impacts of 2023’s tax cuts. After declining by 16 percent in FY 2024, income tax collections are down another 12 percent compared with this point last year—and that’s before the triggered tax cut and property tax rebates have begun to impact collections,” Allen said.
“Given the significant obligations our state faces — from funding for child care and schools to flood preparedness — this report makes clear lawmakers should pump the brakes on additional cuts and focus on meeting the needs of our people.”