Gov. Jim Justice and the Legislature need to check their numbers before they send West Virginia into a financial tailspin. Right now, the state is looking at some very expensive new outlays at the same time tax revenue is decreasing, with new tax cuts about to be triggered and Justice requesting even more cuts. So far, the math isn’t adding up to anything good.
Let’s look at revenue first: By the end of June, the state had collected $700 million less in taxes than it had by the same time last year, down from $6.48 billion in 2023 to $5.7 billion in 2024, thanks to the personal income tax cut instituted this past year.
Now add in the tax cuts that will hit by 2025: the personal property tax rebate on vehicles, at $200 million; the personal income tax on Social Security benefits, at $10 million; and 3% to 4% in triggered personal income tax cuts, expected to decrease revenue by $90 million. Justice has also asked the Legislature to approve an additional 5% tax cut, to the tune of $100 million.
That’s $400 million in additional revenue loss. That means, by the end of next fiscal year, West Virginia will have about $1.1 billion less than it had in 2023. And don’t think the loss will be offset by the “surplus,” which was $826 million this year — only 75% of the cuts.
“Surpluses” are the result of the Justice administration intentionally underestimating revenues and setting an artificially low budget. This, in turn, makes the state look much better than it really is once the official collections come in. However, surplus dollars can only be used for one-time funding; they cannot be considered when the Legislature is establishing payment sources for recurring expenses. And there are several high-dollar recurring expenses that are going to hit in the next few years. For example, the Third Grade Success Act, at $33 million; Behavioral Health Centers, at $25 million; and PEIA, at $61 million.
The state also hit the threshold to expand the Hope Scholarship for academic year 2026-27 to all school-aged children. Right now, the Hope Scholarship allows children leaving public schools, or who would otherwise be starting kindergarten, to receive the state funding designated for them in the form of a voucher. However, kids who are past kindergarten but have never been in public school do not have designated funding from the Department of Education. Therefore, the expansion will cost the state an additional $200 million each year from the general revenue fund.
This is just a fraction of the state’s expected expenditures.
You don’t have to be a math (or tax) genius to see the state’s expenses are increasing, but the money in the bank is exponentially decreasing. At the same time, though, West Virginia can’t afford to have expenses cut back any further.
Everyone likes to have more money in their wallet, but we also want top-notch schools, safe and well-staffed prisons, a functioning child welfare system and smooth, well-maintained roads and bridges. And we get those things with our tax dollars.
No politician wants to raise taxes, but West Virginia can’t afford for lawmakers to keep cutting them or it will lead us to ruin.
