Lawmakers who wanted more specifics before buying into another income tax cut said they finally heard enough detail to feel confident.
Others questioned whether the reduced spending to balance out the tax cut will shortchange state programs meant to support childcare and child welfare.
Gov. Jim Justice’s administration on Monday changed a proposal that would shift a proposed personal income tax cut from the 5% that the governor has touted to a 2% tax cut instead. In addition, representatives of the administration broadly described how to trim some government costs to make up for the decrease in state revenue: savings from a bond that’s about to be paid off, plus expectations of fewer costs from the state’s health and human services agencies.
Senate President Craig Blair, R-Berkeley, said he supports the tax cut “and it’s within the scope of what we can do now.
“It’s what we can afford to do. We’ve been negotiating and dealing with this for the past, probably, two months. We’ve been working on things to know what we can do and what we can’t do,” Blair said on MetroNews’ “Talkline.”
Once that proposal came together, the state Senate swiftly voted for the tax cut proposal the very same afternoon. The House of Delegates sent the issue to committee, asked more questions of the Justice administration and returned today to pass the bill during a midday floor session.
“We’re happy to move forward with the bill,” House Speaker Roger Hanshaw, R-Clay, said today on “Talkline.”
“We wanted to be sure that we were being responsible here. As I’ve said before, we wanted to see some offsets. They brought them, and that’s what we asked for, and that’s what we expected, and they complied.”
Delegate John Williams, D-Monongalia, said on WAJR Radio today that the additional 2% is underwhelming.
“It started out at 5% and now it’s 2%. It just seems to me like it’s more check the box legislation so we can go home and tell people we cut taxes when in reality the tax cut is going to be $80 to $100 a year for families,” said Williams, a member of the House Finance Committee. “I mean, we’re not really delivering for the state.”
The additional 5% personal income tax cut was estimated to equate to about $110 million that would not be available to pay for the expenses of state government.
The 2% that lawmakers will be considering instead would be around $46 million, state officials said.
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.
Acting Revenue Secretary Larry Pack told members of the House Finance Committee that the administration is confident that the financial balance is achievable.
Pack said reduced revenue can be made up in part through $19 million from a revenue bond that’s about to be paid off. And he made reference to the recent reorganization of the former Department of Health and Human Resources into three separate agencies that share some functions.
“We’re going to get most of that out of the DHHR reorg, as things keep moving forward on that reorg. So we’re going to get most of it out of there. But there’s plenty of room in government to get the rest. Or really you can get a similar amount,” Pack told delegates.
“The taxpayers get to keep $46 million. The State of West Virginia gets $46 million less.”
Lawmakers had 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.
Senate Finance Chairman Eric Tarr, R-Putnam, had repeatedly raised questions about whether the state could afford another tax cut right now. He said representatives of the Justice administration finally provided a satisfactory explanation through “the reduction in spending that allowed it to happen.
“That’s been a discussion all the way through. I’ve said any time I’ve been in public talking we want tax cuts as well from the Senate. The thing is we want to make sure we do them responsibly.”
Tarr said lawmakers pressed the governor’s office for offsetting spending reductions. Although the administration provided only a certain level of detail, Tarr said he was satisfied.
“The cooperation from where they said they could get them gave me confidence to where they were specific enough. The reason I said that is they were looking in the areas that if I were going to go look and it was my bill, they’re the areas where I would go looking to first,” Tarr said in an interview from the Senate floor following a Monday session.
“There was a lot of conversation before we ever got to that point where they were looking at other areas that we wouldn’t consider because they were one-time spends instead of base items. So what they brought was valid areas, where I think spending could be reduced and they’re bringing those to us.”
Delegate Kayla Young, D-Kanawha, questioned whether government programs meant to support West Virginia families will have to make sacrifices because of reduced state finances.
“It does look like there’s going to be a compromise the income tax, but they’re taking that money from the Department of Human Services, which is where we could be funding childcare,” Young said on WCHS Radio.
Prevent Child Abuse West Virginia expressed concern about the likelihood that of reduced funding for child care and child welfare programs.
“Governor Justice’s plan to cut income taxes by reducing funding for the Department of Human Services puts West Virginia’s children and families at risk. It’s simple: when we underfund child welfare and prevention services and programs for children and families, more kids slip through the cracks, more families struggle, and our communities suffer,” said Jim McKay, state coordinator for Prevent Child Abuse West Virginia.
“Instead of jeopardizing the safety of our children, lawmakers should prioritize what matters most — keeping families strong and children safe. For years, people across the state have been advocating to expand effective strategies that prevent child abuse and help children thrive, but the Governor’s office and legislative leaders have claimed the state can’t afford to do so. It is insulting that they now testify that it is not difficult to find $20 million in the agency’s budget to offset another tax cut but claim they cannot afford to fund childcare and other programs that keep kids safe.”
Kelly Allen, executive director of the progressive West Virginia Center on Budget & Policy think tank, also questioned whether the money for the tax cut is truly available without sacrificing other needs.
“We are deeply concerned about the lack of specifics about the impact of paying for another tax cut out of the agency responsible for child welfare and health care for the state’s most vulnerable people,” Allen said.
“This special session has failed to address the child care funding providers are asking for or child welfare more broadly in a state with unacceptable health, poverty, and child welfare outcomes. To hear Justice Administration officials flippantly say that the Department of Human Services can pay for the tax cut was alarming given the great depth of needs faced by those the agency serves.”