Delegates sent an income tax cut bill rocketing out on a 95-2 vote toward the Senate, where the Finance Committee chairman says it has no chance of survival.
House Finance Chair Vernon Criss said the dominant passage vote in that chamber should send a message.
“It’s once in a lifetime or a generation that we are able to send to the Senate a resounding message of that size a vote that we are very concerned about doing personal income tax responsibly over the next three years of 50% with the goal at some point to take it to zero,” Criss, R-Wood, said after Wednesday’s vote.
The personal income tax reduction is structured as 30% the first year, then 10% each of the following two years. The same percentage reductions would be applied to all the current tax brackets.
So, West Virginia’s five brackets — 3%, 4%, 4.5%, 6% and 6.5% — would all be cut exactly in half over the next three years.
A fiscal note assessing the bill concludes it would decrease General Revenue Fund collections by about $161.8 million in fiscal year 2023, $1,084.5 million in fiscal 2024, $1,229.6 million in fiscal 2025, and $1,492.6 million in fiscal 2026.
Right now, West Virginia is running a budget surplus of hundreds of millions of dollars. But that’s based on several factors, including high energy prices that have produced high-performing severance tax returns and artificially low state revenue projections that have enforced relatively “flat” budgets for several years in a row.
Members of the Republican majority in the Senate have questioned the administration’s promises of financial stability down the line.
Senate Finance Chair Eric Tarr, R-Putnam, today said the proposal has no chance there. He said senators don’t trust the numbers coming from the Justice administration.
Tarr said senators would be interested in a sustainable, safe tax cut. But, “as that plan sits, coming across to us, it’s a no-go, D.O.A.,” Tarr said, referring to it as dead on arrival.
The Senate chairman said distrust built up during the governor’s tour of the state last fall to rally against Amendment 2, which would have opened the door to personal property tax cuts. Senators said those cuts would have encouraged development. The governor called them irresponsible and suggested senators were motivated by their own political ambition.
“It’s not anything where it’s a punch back because the governor called us a name or whatever ‘then we’re not going to do anything you say.’ What it is, is we’ve realized you cannot trust the executive. Not only can we not trust them, they will come out on assault that is based on false pretenses to get their way.
“So what we’ve learned, our committee has learned and our caucus has learned is the truth to the governor is whatever it is that day to get his end result, and it can change in a minute.”
Justice has hinted strongly that he intends to run for U.S. Senate in 2024, making a national splash.
“As the governor has presented this bill,” Tarr said, “it’s essentially an in-kind contribution to his Senate fund from the taxpayers of West Virginia.”
Justice praised the House’s passage of the tax bill.
“I encourage the Senate to expediently vote in favor as well,” Justice, a Republican, said in a statement distributed by his administration.
The West Virginia Center on Budget & Policy, a progressive think tank, said the tax bill will cut so deeply into state revenue that hard choices would need to be made about crucial services.
“HB 2526 will decimate the state budget, and with it, vital programs that serve all West Virginians,” stated Kelly Allen, executive director. “The West Virginia House recklessly passed this legislation with no consideration of how to fill the hole created by eliminating the equivalent of a third of our state’s budget.
“Instead of focusing on shoring up PEIA, filling public job vacancies, investing in programs that serve children and families, or fixing our state’s infrastructure, both parties decided to enact a huge permanent tax cut for the state’s wealthiest people based on one-time revenues and a short-term energy boom.”
Criss, the House Finance chair, said he trusts the numbers in the tax plan.
Of the Senate, he said, “I understand that they don’t seem to think that, just because of the origin of the bill coming from the governor and not working with them in the past on something like this, I’m sorry for their not considering what we feel our numbers and the governor’s numbers seem to indicate.”
Delegate Brandon Steele, standing nearby after the Wednesday floor session, offered a comment comparing the tax bill to the courage required for a jump from an airplane.
“I’m sure that the first guy that jumped out of an airplane had second thoughts about what was going on, but we have to have the stones to do it or nobody jumps out of the airplane,” said Steele, R-Raleigh.
“We’re doing that right now. We’re reducing taxes for the first time in how many years now.
“This is like jumping out of the airplane for the first time. We just have to have the courage to do it.”
