The state Senate Finance chairman isn’t buying Gov. Jim Justice’s pitch to follow up an automatic reduction in the personal income tax with another 5% on top of it.
The governor made the pitch this past week at the state Culture Center, telling lawmakers, “I want to challenge you to some way somehow try to do an additional 5% on the personal income tax.”
Senate Finance Chair Eric Tarr said doing so could get the state out of balance with other tax cuts already going into place alongside the state’s projected expense obligations.
“The governor dropped the bomb on us there on stage because we didn’t get the heads up, which tends to be his MO, to go in and discuss and hear his reasoning,” Tarr, R-Putnam, said on MetroNews’ “Talkline.”
He said another 5% equals about $100 million. That’s on top of a tax cut automatically triggered by economic indicators of 3% or 4% for this coming year, amounting to about $90 million. And he noted that lawmakers agreed to phase out the state income tax on Social Security benefits, equating to about $10 million this year.
All that could result in two scenarios, Tarr said.
“Either you’re going to have to go in and reduce spending that is so bloody that you can afford that — bloody by, I mean, it is going to be politically challenging and it will be citizen uproar on some of those services because we’ve been catching infrastructure up, we’ve been getting sewer and water done, we’ve been getting roads done, we’ve been getting broadband done. You want to stop all that then go ahead and throw another $100 million in expenses there for perpetuity before we get the opportunity for revenue growth for the things we’ve done.
“In addition to that, when we go in and accelerate that tax cut we have to look at an offset if we’re not going to reduce spending. So if you don’t go in and make those aggressive cuts — which I’m all about reducing size of government and cuts; I’ve been pushing that and pushing that. That’s what flat budgets have done. They have reduced the expense of government — but if we go in and we don’t reduce the spending aggressively to that bloody level, then you’ve got to go find a tax somewhere else you’ve got to increase.”
Justice’s remarks came as the conclusion to the most recent fiscal year resulted in revenue of $826 million above the estimate set annually by the governor. The fiscal 2024 estimate had been $4.88 billion. The actual revenue collection wound up being $5.7 billion through June.
The difference came as the state instituted a 21.25% personal income tax cut this year in a package that included further automatic reductions under certain economic conditions.
The governor said the state will hit those conditions for the automatic income tax cuts of 3% or 4%, and then he challenged lawmakers to follow up with the additional 5% during a special session Justice said he would call in late summer.
“For God’s sakes a living, don’t be afraid. Don’t be afraid,” Justice said.
Justice has followed up on that goal in the days since. During an appearance on “Dave Allen Today” on WCHS Radio, the governor said his administration’s track record demonstrates that it should be trusted.
“We’ve done the right thing growing this economy; we’ve done the right thing keeping this budget flat. Why in the world would we now do the wrong thing? For people who want to sit on the sidelines and do nothing, then at the end of the day we will get exactly, ultimately, in the end — mark it down because I’m not going to be here very much longer — in all honesty we will get exactly what we deserve,” Justice said.
“So we better listen to a business guy that’s got a track record that’s probably doggone good. So I love all the people of West Virginia beyond good sense too.”
Justice made similar remarks during a Wednesday event in Hinton with the West Virginia Division of Natural Resources. At the introduction of a dive team, the governor focused on the state’s economic condition.
“What I proposed the other day — and I hope to goodness you’ll let your lawmakers hear this loud and clear — what I proposed is just this: We hit a trigger to reduce our income tax by another 3 or 4%. At the end of the day, we cut our income tax 21 and a quarter percent and now I said ‘We’ve got all these surpluses; we’ve got all this stuff. There is absolutely no reason in the world we don’t do another 5%,’” Justice told the crowd.
“Now at the end of the day, it’s hard to argue. Have we not taken care of West Virginia like we should have taken care of West Virginia over the last seven and a half years? It’s hard to argue that. And absolutely I believe with all in me this is what we should do. Now we’ve got people around that are really naysayers in a lot of different ways, but you’ve got to show your voices.”
