CHARLESTON — The tax-based rift between Gov. Jim Justice and the West Virginia Senate remains as wide as ever, as evidenced by another call from Justice for senators to consider his personal income tax plan.
Justice’s tactic on Friday was to ask West Virginians to reach out to their state senators and ask them to support his proposed 10% income tax rate cut — a measure Senate leaders consistently have said they do not support.
The governor used the latest state revenue report to once again plead to legislators and West Virginians to support his proposal.
The State of West Virginia collected $506,998,754 in revenue for August, exceeding Justice’s revenue estimate by a little more than $141.8 million.
Justice said during his COVID-19 briefing Friday that state leaders can’t “keep trying to play politics” as he discussed the surplus and his ongoing frustration with the Senate’s lack of interest in his tax plan. Justice likewise called on the Senate to act in a news release Thursday evening.
“I do not know why in the world we keep sitting on our hands,” Justice said during the briefing.
The state’s biggest surplus, by individual tax, for August came from the severance tax, according to a report generated by Senate Finance Committee staff.
The state collected $129.207 million in severance taxes, more than $105 million above estimates.
The state collected $186,021,776 in personal income tax revenue in August, exceeding estimates by $15.171 million.
The state’s consumer and sales tax garnered $150.884 million in August, exceeding estimates by $20.084 million. That revenue reflects sales made in the state in July.
The state collected $14.773 million in tobacco tax revenue, about $373,665 above estimates.
Justice, with support of the Legislature in recent years, has significantly underestimated how much revenue the state will bring in for at least the last three years, creating significant surpluses.
The actual amount of revenue brought in by the state has remained fairly steady the last four years, even taking in the effect of the start of the COVID-19 pandemic in 2020. Lawmakers have expressed concerns about the sustainability of the budget under a proposed income tax cut since the state’s revenue has had support from federal COVID-19 relief money the past two years.
The state ended fiscal year 2022 in June with a $1.3 billion surplus, due in part to an unexpectedly booming natural gas market.
Revenue Secretary Dave Hardy and Deputy Revenue Secretary Mark Muchow have warned lawmakers to not make fiscal decisions based on severance tax revenue, since it isn’t a predictable or reliable source of income.
Justice has used the $1.3 billion surplus as a catalyst for introducing his personal income tax reduction plan.
The state actually collected more than $5.8 billion in fiscal year 2022, which, like the year before it, included an influx of federal money through COVID-19 relief.
In fiscal year 2021, the state collected $4.989 billion, giving West Virginia a $497.58 million surplus, according to State Budget Office records.
West Virginia collected $4.49 billion in fiscal year 2020, which ended in June 2020, and garnered a $198 million surplus.
Senate President Craig Blair, R-Berkeley, and Senate Finance Chairman Eric Tarr, R-Putnam, weren’t available for comment Friday.
Blair and Tarr previously have said they prefer a plan that would reduce business and inventory and property taxes and eventually reduce the personal income tax if the state meets certain economic thresholds.
Justice convened the legislature for a special session in July to consider a 10% reduction in the state’s personal income tax rate and to clarify laws restricting abortion access in West Virginia, but the session ended without any results.
“I applaud the governor for putting his plan on the call, because what it has done has given us an opportunity right now and over the next couple of months to go out and work with our counties, let the people know what’s going on,” Blair said during a floor speech during the special session on July 29.
Instead of Justice’s bill, the Senate adopted Senate Resolution 303, which outlined the Senate’s tax proposal.
The Senate’s plan hinges on voters adopting what’s been dubbed Amendment 2, which would amend the West Virginia Constitution to allow the Legislature to change property tax rates in the state.
Justice and Senate leaders verbally sparred leading up to the special session after Justice used one of his COVID-19 briefings in July to call out Blair for not supporting his tax proposal.
Bair and Tarr responded by sending Justice a letter saying he was welcome to meet with the Senate Republican Caucus, an offer that Justice accepted. That meeting did not result in an agreement between Senate leaders and Justice.
House Speaker Roger Hanshaw, R-Clay, largely has stayed out of the public sparring, only saying the House supports any tax plan that is sustainable long-term and doesn’t result in “outsize tax shifting to other taxpayers.”
The Legislature never adjourned sine die from the special session, with Justice’s personal income tax proposal dormant between the House and Senate and legislators at an impasse on a measure to restrict abortion access in West Virginia.