Governor pushes income tax cut, senators invite him to speak directly
Gov. Jim Justice wants lawmakers to pass an income tax cut in a special session beginning Monday. The Republican majority in the House of Delegates seems ready to go along with it.
But Republican leaders in the Senate have said their preference is to continue laying the groundwork, instead, for personal property tax cuts across the board.
And the governor and the revenue secretary are saying in no uncertain terms that the Senate majority’s approach is wrong.
So who knows where all of this is happening early next week.
“On the Senate side, our Senate president is really, really hooked on the vehicle property tax and the machinery and inventory tax,” Justice said during a briefing today. “And to put it as it is, we would like in this world to be able to do anything and everything. I have, frankly, a completely opposite view in that I’m not motivated by anything when it comes to influence or lobbyists or anything.
“But I personally believe that if you want people to come to West Virginia, if you want real growth within our state, without a doubt, we have to go down a path to try to get rid of our tax on personal income or at least lower it.
The Republican governor has been talking about an income tax cut of around 10% for the past few weeks. In the middle of this week, he presented his proposal – the brackets for low wages getting slightly higher percentage breaks.
Although Senate Speaker Craig Blair and Senate Finance Chairman Eric Tarr, both Republicans, earlier stressed that their preference was to move forward with property tax cuts first, they did not have made no public statement since the governor announced the income tax proposal.
The senators invited the governor to discuss the tax proposals during a caucus meeting on Sunday evening.
“We have repeatedly attempted to engage in a meaningful conversation with you because we believe the leaders of this state should speak directly and not through intermediaries,” Blair and Tarr wrote in a signed letter to Justice.
“The Senate Majority Caucus is optimistic that it would be productive to discuss and compare your income tax bill, which proposes to reduce West Virginia’s average income tax deduction by about $9 per paycheck, and the Senate’s plan to eliminate personal property taxes in West Virginia.”
The justice said the property tax cuts would depend first on West Virginians approving a constitutional amendment to allow legislative action and then on passing a bill. The income tax cut can be done now, he said.
“It’s a dumb place sometimes, and really and really egos get in the way a lot of times. From the perspective of the Senate and the House, we wanted a reduction in our personal income tax,” Justice said, referring to proposals from previous years that never made it through.
“We have for all intents and purposes very low property taxes in West Virginia today. Our personal property taxes are quite low. If that was the solution, to reduce them further, why haven’t there already been more people? You can’t tell me that getting rid of personal income tax is even comparable.
The governor’s office estimates that the personal income tax cut would total just over $250 million. The governor points to a budget that ended the fiscal year $1.3 billion ahead of the estimate.
The property tax cut proposal is not yet set in stone, but widespread estimates suggest it could be more than $500 million, with the state having to reimburse counties that depend on property taxes for provide local services.
Revenue Secretary Dave Hardy today said it would amount to financial disaster.
“That kind of number would fundamentally wreck the state budget going forward,” Hardy said on MetroNews’ “Talkline” today.
He continued, “It makes the counties, the schools, the county government, the municipal government, every year dependent on the state budget. Every year. If you replace the income that basically makes them dependent on the state government every year in the future.
House Speaker Roger Hanshaw, R-Clay, today said he broadly supports the Governor’s income tax plan while believing the state can begin to take steps to phase out the personal property taxes. “We generally support the idea of an income tax cut,” he said.
But the House leader said it was wise not to try to predict what the Senate would do.
“The number one rule for being Speaker of the House is never to pronounce on what the Senate is likely to do, so I wouldn’t even begin to speculate on that,” he said.
On the overall odds of passing, Hanshaw said: “I don’t know the answer to that question. I think the House has already passed it and it is likely to be passed again. I don’t know what happens at the end of the week.