WHITE SUPLHUR SPRINGS — With many West Virginia business leaders under one roof this week, the debate over the best approach to tax reform in the state has taken center stage, Governor Jim Justice and the Senate Speaker Craig Blair presenting competing plans.
Speaking during his weekend COVID-19 briefing on Capitol Hill Friday afternoon, Justice said it’s time for the West Virginia Senate to back his personal income tax plan. by 10% with tax revenues exceeding estimates for the second month of the new fiscal year.
“I don’t know why in the world the Senate won’t act,” the judge said. Virginians right now.”
According to data from the State Department of Revenue and the Senate Committee on Finance, collections for the general revenue fund for the month of August were $507 million, beating the revenue estimate by 32%. of $365.2 million, giving the state $141.8 million in excess tax revenue for the month. This is in addition to the $92.4 million surplus from July, the first month of the new fiscal year 2023.
“Our revenue numbers continue to be excellent,” Justice said. “I couldn’t be more proud, that’s all there is to it. We did exactly what you employed me to do, and that was to pay attention to the store and get our condition back to normal. the place. I promised you a rocket ride and there you are. Absolutely, our state continues to do a great job.
West Virginia ended fiscal year 2022, ending in June, with $1.3 billion in excess tax revenue and leaving the state with about $515 million in excess revenue after credits for items placed in the behind the new general revenue budget approved by lawmakers in March. State tax officials attribute the excess tax revenue to maintaining a stable budget, natural economic growth, and a booming fossil fuel economy.
Judicial and legislative leaders see these record tax revenue surpluses as an opportunity to return tax relief to West Virginians, but agreement on the best approach to take remains elusive and sometimes abrasive.
The West Virginia Legislature remains in a halted special session due to disagreements over House Bill 302, a bill to create a modernized ban on abortion with limited exceptions. During that special five-day session at the end of July, the Senate defeated House of Justice Bill 301, creating a 10% reduction in personal income tax distributed among six tax brackets. The bill would net taxpayers $250 million if passed.
“From the perspective of our House of Delegates, they are there with me,” Justice said. “I don’t know why in the world we are sitting on our hands while people are suffering and fighting inflation like crazy, whether it’s gas prices or food prices or whatever. that is.”
In a Thursday night press release, Justice called on the Senate to pass HB 301 once the special session resumes and encouraged the public to contact their state senators to pressure them to pass the bill. . Justice doubled down on its appeal to pass HB 301 on Friday.
“We have the surpluses, and I’m asking you to reach out to our senators who are great people and all,” Judge said. “Reach out and tell them we have to do it, and we have to do it now.”
Justice also referred to a proposal by Senate Republicans as part of a plan if voters pass Amendment 2 in the November ballot. Amendment 2 would give lawmakers the power to reduce or eliminate six categories of taxes on tangible personal property. Revenue from tangible personal property taxes goes to county governments and county school systems.
If Amendment 2 passes, Senate Republicans want to eliminate property taxes on machinery and equipment, furniture and fixtures, rental investments, computer equipment, inventory and vehicles. The state would then fund the 55 counties at their actual county tax dollar assessments and provide the counties with at least $1 million in addition to their estimates to fund the counties directly through the general revenue fund.
The Senate Republicans’ overall plan is a bill that would allow personal income tax reductions based on increased consumer sales and the use of tax revenue. Sales tax revenues would need to increase by 5% to trigger a reduction in the tax rate distributed among each tax bracket.
Another bill would provide West Virginia taxpayers with a refund on their 2020 tax year personal property taxes on motor vehicles. Another bill would provide a benefit increase for certain teachers and retired public sector employees at a cost of $26.5 million, as well as a one-time payment of $1,500 for retired public sector employees over the age of Age 70 on July 1 with 20 or more years of state employment and receiving less than $1,000 per month.
Senate Speaker Blair, R-Berkeley and many other state lawmakers were at Justice’s Greenbrier Resort in White Sulfur Springs Wednesday through Friday for the 86th Annual Meeting and Business Summit of the West Virginia Chamber of Commerce .
Speaking on Friday morning, Blair said his view had not changed on the need to eliminate taxes on tangible personal property before phasing out personal income tax, although he did not object to taking action on both fronts if possible.
“Nothing changes,” Blair said. “If we can do both, we will. We are trying to develop a strategy to be able to do that and not put ourselves at financial risk in the future. If we can’t understand that path forward, that’s not I have more than 18 members of my caucus saying that personal property tax comes before personal income tax.
Blair participated in a panel discussion on Amendment 2 earlier Friday morning at the Business Summit with West Virginia Chamber of Commerce President Steve Roberts, West Virginia Manufacturers Association President Rebecca McPhail, Bowles Rice attorney and former state tax official Michael Caryl; and House Speaker Roger Hanshaw, R-Clay.
“When it does pass, and we think it will, in November, then we have to have a plan, because when it does pass, it will come with expectations,” Blair told trade summit attendees on Friday. “There is a commitment to ensuring that our counties, our municipalities, our school boards, everyone succeeds, and you share the wealth together.”
The House passed HB 301, the personal income tax bill, by a wide margin with bipartisan support. HB 301 is similar to a bill passed by the House during the regular legislative session. But Hanshaw said he was committed to seeing Amendment 2 approved by voters.
“If you’ve actually read Amendment 2 and you’ve not just read it, but actually read it, you’ll find that it doesn’t cost a dime,” Hanshaw said. “It doesn’t cost anyone a penny at any level of government. It doesn’t cost a penny because passing the amendment only gives the Legislative Assembly the power to start considering options on tax reform.
Justice has not officially offered his support or opposition to Amendment 2, but he has made it clear that he does not support the Senate’s proposal to eliminate taxes on tangible personal property. He believes it would provide only limited relief to individual taxpayers and benefit large corporations and out-of-state corporations.
“We are absolutely bogged down by hundreds and hundreds of thousands of hardworking West Virginians because of the wishes of very, very few. We have to stop this,” Justice said. “At the end of the day, our job is to listen to people and try to do people’s jobs. It’s not our dollars, it’s people’s dollars, so we really have to push that through.”
Blair believes Justice’s 10% personal income tax is too low to benefit state taxpayers, preferring to eliminate taxes on tangible personal property first and then begin a phase-out of tax rates. personal income tax. Blair also pointed out that the driver of the state’s tax revenue surpluses in recent months has been the coal and natural gas severance tax paid by corporations, not the income tax collection of corporations. individuals.
“The governor talks about giving the money back to the taxpayers. Our plan does that,” Blair said. “It’s just excess revenue. And by the way, it’s not coming from people. It’s coming from fossil fuel prices. So you shouldn’t think of it as something that comes from people.”
Steven Allen Adams can be contacted at [email protected]