West Virginia governor calls special session on income taxes
CHARLESTON, W.Va. (AP) — West Virginia Gov. Jim Justice called on state lawmakers Wednesday to meet at the Capitol next week to consider a permanent 10% reduction in the state’s income tax.
“Once we get the ball rolling, we can keep coming back and chipping away at our personal income tax until it’s completely eliminated,” the Republican said. West Virginia’s tax collections for 2021 totaled $5.89 billion.
Inflation and rising gas prices are taking a toll on residents’ budgets, and they need relief, so Justice asked lawmakers to convene a special session at noon on Monday.
“The most important thing to do is get started right away,” his statement said.
Justice said his proposal contains no increases on any other state taxes, and that personal tax brackets would remain the same. He said West Virginians at every income level would see their taxes drop.
The state of West Virginia ended the last fiscal year with a record $1.3 billion surplus.
A 10% reduction is the maximum cut allowed while remaining in compliance with funding stipulations in the American Rescue Plan Act, he said. Justice said the proposal would be retroactive to Jan. 1 and would put $254 million back into residents’ pockets when they file their 2022 taxes.
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The West Virginia Center on Budget and Policy, however, said the governor’s proposed tax cut would be ineffective when it comes to helping families and working people because it would largely benefit the wealthy.
More effective ways of using the revenue surplus, the nonprofit said, include investing in the state’s public employee insurance program, providing subsidized care to an additional 10,000 children, enacting a paid family and medical leave program for all workers, investing in workforce development, and giving all families a one-time $250 tax credit for each child.
Democratic lawmakers said Wednesday they appreciate that Justice wants to help West Virginians who need financial relief. But they expressed frustration that the governor hasn’t taken action on proposals for gas and sales tax relief and family tax credits they’ve pitched in the past several months.
“Those suggestions have largely been dismissed or ignored by the Governor and the Majority Party,” Senate Minority Leader Stephen Baldwin said in a statement.
House Minority Leader Doug Skaff, Jr. said Justice announced his special session call without discussion with or input from legislators.
“The limited special session call also precludes us from discussing other avenues for meaningful tax relief for West Virginians,” he said.
The governor’s pitch is the third attempt to cut personal state income taxes in the past year.
Justice tried for a 60% cut last year to spur population growth in a state that lost a higher percentage of its residents than any other over the past decade. The proposal was unanimously rejected in the House.
A 10% tax cut was passed by the House of Delegates in March but never made it to a vote in the state Senate.
For the year, personal income tax collections of $2.5 billion were $461.5 million above estimates and 16.6% higher than a year earlier. Consumer sales tax collections of $1.66 billion were $181.7 million above estimates and 7.7% higher than fiscal 2021.
Corporate net income tax collections of $366.3 million were $206 million above estimates and 38.5% higher than a year earlier. Severance tax collections of $768.8 million were $438.9 million above estimates and 180% higher than a year ago.
Revenue Secretary Dave Hardy said 48% of severance taxes, which apply to the extraction of natural resources, were from natural gas, 35% was from coal and 17% were from other sources, including oil. Hardy said it’s a further indication that the state’s energy sector economy is diversifying.
Justice made no mention in his announcement of any effort to clarify state law on abortion, though he has hinted in recent days that it might be the subject of a special session as well. A Charleston judge blocked the state from enforcing a 19th-century abortion ban law Monday, saying the statute conflicts with more modern abortion laws on the books in West Virginia. Attorney General Patrick Morrisey filed a motion to the state Supreme Court the next day, asking justices to stay that ruling while his office appeals.