Delegates asked questions about the amount of Gov. Patrick Morrisey’s proposed tax cut and whether the state can actually afford it right now.
Those questions came during a House Finance Committee meeting on Friday morning and are likely to continue as the 60-day regular session rolls on.
Administration officials said the budget proposal actually was calculated with a 5% tax cut in mind. Morrisey, during his State of the State address, made a pitch for a 10% tax cut.
In dollars, the 5% would add up to about $125 million. The 10% would equate to about $250 million.
A year ago today, the new governor’s administration was projecting a budget gap of more than $400 million for this fiscal year. State officials wound up making moves to fill that gap, and the state wound up running a modest surplus.
Yet that context prompted Delegate Michael Hite, R-Berkeley, to ask how the administration is proposing a tax cut now.
“So last year, about this time, we were hearing of a $400 million structural deficit. And now fiscal year 27, we’re growing by approximately $170 million, and we’re proposing cuts to PIT of 10 percent. The math doesn’t make sense,” Hite said in the finance meeting.
“What what happened between last year and this year if we have overcome a $400 million structural deficit in the out years and we can afford a 10 personal income tax cut?”
Deputy Revenue Secretary Mark Muchow responded that the state is on stable ground in many ways, financially, because of steps taken already. “And the governor strongly believes that further progress in terms of finding efficiencies will get us to the goals we want to have,” Muchow said.
The Legislature and the prior administration cut its personal income taxes significantly in recent years through a series of legislative and trigger-based reductions, resulting in a cumulative decrease of about 27% since 2023.
“Help me understand that our revenue estimates are not high enough to trigger the triggers, but are high enough for 10% reduction. How can you explain that?” Hite asked.
Muchow responded that the governor believes the state’s financial numbers are sufficient for the proposed reduction.
Now lawmakers will need to have ongoing discussions about whether the state can afford another tax cut at this moment, and how much.
House Finance Chairman Vernon Criss, R-Wood, described the balance that will concern lawmakers during an appearance this week on MetroNews Talkline.
“Well, we already have a tax plan in place for reduction that we passed a couple of years ago, and as the economy grows and meets its parameters, we take the cuts as needed,” Criss said.
Cutting again so soon, Criss said, could risk an overextension of the state’s financial resources.
“We need to make sure that we can continue to provide the services that our citizens want and need and that are necessary, and that we have the funds to continue to do that,” Criss said.
During Friday’s meeting, Delegate John Williams asked about the difference between the governor’s public ask for a 10% tax cut versus the 5% cut that is reflected in the proposed budget.
“The governor said 10% at the State of the State. The Constitution says explicitly that he’ll make recommendations on measures that he deems expedient,” said Williams, D-Monongalia.
“What was the thought process in going with 10% on Wednesday night and then coming back here 12 hours later and saying 5 percent? Why not just say 5% on Wednesday night?”
Muchow responded that the governor wants at least 5% but also wants to involve the Legislature to see if there are ways to get to 10 percent.
Later in the meeting, Revenue Secretary Eric Nelson acknowledged, “The general revenue budget that we’re working with is $5.493 billion, and that includes a 5% personal income tax reduction. I’ll re emphasize 5% is built in to our budget. The additional 5% to get to the 10% goal of the governor will be worked on, but we had built in the 5 percent.”
Williams, in the hallway after the meeting, suggested the governor should have been straightforward with the citizens by saying 5% at the spotlight address if that’s what his administration was budgeting.
“I understand that with some issues, there are going to be broad strokes, but with this one, it’s a very specific number, 10% versus 5% the next day,” Williams said.
“I feel as if that was said the night before with 10% because there were cameras in the room and everyone was talking about it, and that’s what you guys rightfully reported because that’s what you were told. And then all of a sudden that changes. I felt as if it was, it was a disingenuous representation. It was like a bad dating profile.”