Gov. Jim Justice’s proposed 50% tax cut wasn’t on the West Virginia Senate Finance Committee’s agenda Monday, but the governor said in a news conference he remains hopeful the legislation will cross the finish line.
Justice said there’s a tradition in the Mountain State of dressing up pickup trucks, but he didn’t dress up his tax cut proposal.
“This is a plan that does not have mud flaps or squirrel tails,” Justice said in a news conference Monday at the Capitol.
The plan would reduce taxes by 30% in Fiscal Year 2023 and by 10% the following two years.
It also would reduce income tax revenue by $161 million in FY 2023. That number grows to $1 billion in FY 2024 and to $1.5 billion by the time the reduction is fully implemented. The reduction in revenue would be permanent, unless the tax is increased later by a future Legislature.
“All of our big revenue streams are setting records,” Revenue Secretary Dave Hardy said Monday. “Revenue streams are so high, our proposal is we’re reducing the revenue streams.”
Justice also proposes putting $700 million of the state’s projected $1.8 billion surplus into a Personal Income Tax Reserve Fund as an insurance policy against the loss of revenue created by the tax cut.
“We don’t think we’ll ever touch it,” the governor said. “But just in case, that’s what we’ve done.”
The plan is two-thirds of the way to passage, Justice said.
The House of Delegates voted 95-2, with three absent, last week to advance the plan to the Senate in the form of House Bill 2526. The bill has been referred to the Senate Finance Committee, but it was not on the agenda for that body’s 3 p.m. meeting Monday.
“I’m very, very hopeful and I’m going to stay extremely positive,” Justice said. “Let’s don’t drift into bad thoughts.”
But the Senate has already been heavily scrutinizing the tax plan, as well as the budget Justice proposes to use to fund it. Finance Committee members grilled Hardy during a presentation last week, with Hardy and Committee Chairman Eric Tarr, R-Putnam, exchanging terse words over what could happen when the reserve fund is depleted.
“Are we cutting State Police? Are we cutting our [Child Protective Services]? Are we cutting our senior services? Are we cutting Medicaid aggressively? Are we cutting higher education again? Or are we going to come in and raise taxes when this governor is no longer sitting in that seat,” Tarr asked Hardy.
Justice said he is willing to work with the Senate on the plan but declined to say what concessions he might make, or if a more conservative reduction is on the table.
“We’ve met. We continue to stand with open arms to meet,” the governor said. ”We don’t really have a counter from the Senate side. But we’re really hopeful we’re going to get there.”
During the news conference Monday, Justice discussed similar difficulty last year in getting a 10% reduction that was “basically a rubber stamp on dealing with inflation and $5 [per gallon] gasoline.” The attempt ultimately failed.
“Lord have mercy, it was just like the brakes got hit all over the place and everything shut down,” the governor said. “I thought, ‘Well what in the world is going on?’”
Justice acknowledged that there is bad blood in the Senate over Amendment 2, which would have changed the state’s constitution to allow the Legislature to affect personal property taxes. Lawmakers backed the amendment, but Justice and Hardy went on a tour of the state speaking out against it, often calling lawmakers the “Charleston swamp.”
Voters squashed the amendment on Election Day in November, but lawmakers haven’t forgotten Justice’s remarks.
On Monday, the governor maintained that he was being truthful and it affected voter opinion of the amendment.
“We can’t get over the fact that, you know, now, sure, I went out and voiced my opinion and talked to the people and everything else. But everything I told the people was surely right,” Justice said. “Well, all of a sudden, when people started learning that Amendment 2 was about way more than just your car tax, then, all of a sudden, the people started getting really concerned because the people wanted to keep control in their counties.”
Justice refers to voters collectively as “Toby and Edith,” and he said they got it right on Amendment 2.
“Let me tell you something, Toby and Edith always get it right, once they’re told the facts. We need to listen to Toby and Edith and move on. We don’t need to be stuck in the mud,” the governor said. “If that election would have come out dead the other way, and I had all the power in the world, I would have said, ‘The voters spoke. That’s all there is to it.’ And that’s what we would have done. We would have moved forward. I would still try as hard as I could possibly try all the time for the people of Vest Virginia.”