MORGANTOWN – The writing is on the wall for the personal income tax repeal bill – for this session at least. The Senate on Tuesday punted action on passing the bill for a day and the House speaker said he foresees handling some form of repeal legislation during a fall special session.
The Senate also kicked the can for a day on its budget bill, SB 125.
HB 3300 was on third reading for passage in the Senate on Tuesday and was laid over until Wednesday. The great divide on the bill became clear during Monday’s summit meeting that included the governor and leaders of the House and Senate.
The governor’s new plan unveiled Monday and the Senate plan, passed out of Senate Finance on March 30 and perhaps to be amended into the House bill on Wednesday, are similar in many respects. Both use a variety of tax hikes to offset most of the revenue lost by phasing out the income tax and rely on economic growth to fill in the gaps.
The House plan would phase down tax rates gradually – in as many as 13 years – making use of a special fund fed from other tax revenue to accelerate the phase-down. It provides for no offsetting tax hikes and relies solely on growth.
While Gov. Jim Justice and Senate President Craig Blair, R-Berkeley, saw some potential commonality in their plans during the summit, House Finance Chair Eric Householder, also R-Berkeley, remained committed to the House version.
House Speaker Roger Hanshaw told The Dominion Post in a Tuesday email, “We’re still all committed to trying to address the personal income tax – that’s both the House and the Senate and the governor’s office. It’s hard to deny the economic and population growth in states that have done this, but we’re not there yet on how we want to do it.
He said, “It’s unlikely we will get a bill passed during the regular session. We already know there will be a session in the fall for redistricting, so we know we’re going to be here working.”
Hanshaw said House members are particularly concerned with revenue measures and tax increases on small business owners and border counties. “More than half our population resides in border counties and are particularly sensitive to taxes on goods and services. Another sticking point for the House has been professional services fees for folks like barbers and accountants.”
With everyone else, Hanshaw saw Justice’s revised plan for the first time on Monday, “so I haven’t gotten a chance to spend any meaningful time with it, but we will.”
Hanshaw concluded, “The governor’s selling point for his plan yesterday is the net positive, what he calls money in people’s pockets. We’re interested in making all those opportunities possible, and we hope it means population growth, but we also know that’s not the only factor in people and businesses looking to locate here. We know we need to have good school systems, good neighborhoods and good roads as well.”
Budget bills
Two budget bills were on the Senate calendar on Tuesday. The Senate’s SB 125 was on third reading with right to amend on third. The House’s HB 2022 was on second reading and was moved to third, also with the right to amend on third.
The expectation is that the Senate will amend its bill into HB 2022 and send it back to the House to set up negotiations.
One of the sticking points in the Senate bill is that it cuts than 12% of the allotments to WVU and Marshall. It cuts Justice’s proposed $97 million for WVU to $85 million, and cuts Marshall’s proposed $46.8 million to $40.8 million.
The House bill proposes cuts to both offset by matching surplus funds but the Senate bill leaves the void unfilled. Justice has repeatedly opposed the cuts – most recently on Monday – saying both universities are economic engines for the state.
Amendments to the Senate bill to restore the cuts are expected on Wednesday.
Sen. Mike Woelfel, D-Cabell, talked about such an amendment from him on Tuesday. “I’m hoping that we will recognize the value of those institutions of higher learning,” he said.
While some have said both can make up the loss from federal COVID funds, he said, both have lost significant amounts of tuition during the pandemic and could take more than a decade to recover. Allowing them to make up lost money by raising tuition and increasing student debt isn’t the answer.
“Why in the world would we send a message to the world that we do not value higher education,” he asked.
TWEET David Beard @dbeardtdp EMAIL dbeard@dominionpost.com
