On the 55th day of the 60-day legislative session in West Virginia, Governor Jim Justice gathered the best lawmakers from both parties to discover the differences between three very different plans to cut income tax. Instead, the governor offered a different version of his plan before lawmakers interfered – and the consensus on the matter remained elusive.
The governor’s “summit” began with the judiciary criticizing the plans of the Republican-run House and Senate.
“I disagree with the house plan from the standpoint that it will take a long, long time,” Justice said of House Bill 3300 as it was passed by the lower chamber last month.
Under this plan, the income tax cut would take place over a period of approximately 12 years and cut revenue by at least $ 150 million year over year – more than $ 2 billion in total lost revenue when fully implemented. The House proposal does not offer any new sources of income.
Justice said the House’s plan would not effectively attract people to move to West Virginia – one of his stated motivations for lowering income taxes.
“I think the Senate has grown them big enough,” Justice said, noting however that he sees certain tax increases as a burden on the wrong sections of the population.
A strike and insert amendment to House Bill 3300, adopted by the Senate Finance Committee and slated for a vote by the entire Senate, the amendments to be made on Tuesday, differs significantly from Parliament’s plan, but also deviates from the judiciary’s proposal announced last month .
According to the plan of the Upper Chamber, among other things, the consumer sales tax would be increased from 6 percent to 8.5 percent, the reintroduction of the food tax to 2.5 percent and a new hotel occupancy fee.
“My plan did just that – it tried to make every single living and make West Virginian cashless,” Justice said, arguing that his original plan inherited what he called the “Charleston Swamp”.
But those words of the judiciary, when he recognized the disapproval of some corporate groups and lobbyists, served as the linchpin. Justice then unveiled a brand new set of tax reform ideas – with some aspects of his original plan remaining intact and others changing dramatically.
After handing literature to lawmakers on the stage, the governor announced a new proposal he called the Justice 4 All Income Tax Plan. He then went on to explain the final iteration of his plan, lowering the personal income tax cut to 50 percent (this was a 60 percent reduction in his original plan).
Under Justice’s new plan, consumer sales tax would still rise from 6 percent to 7.9 percent. Proposed increases in beer, liquor and wine, which were included in the judiciary’s original plan, would be removed, the governor said.
After the governor presented his new plan, lawmakers began to comment on the various proposals and to express their own thoughts.
“One of the main concerns that Members of the House always debate at length is how a proposed plan would differentiate West Virginia from neighboring states, particularly with regard to the border district issue,” said House Speaker Roger Hanshaw, R- Clay.
After a bit of back and forth with the judiciary about border concerns
Senate President Craig Blair, R-Berkeley, said he would stand behind the governor’s new plan.
“I would vote for it right away – and I think what you have here is an improvement,” said Blair of Justice’s latest ideas.
“Are we ready today? No, ”Blair said, signaling his willingness to compromise. “But maybe tomorrow. The sooner the better.”
Eric Tarr, Senate CFO, R-Putnam, questioned why the governor’s plan had focused on taxes on coal and gas when he saw President Joe Biden’s proposed natural resource policy as a potential obstacle.
“There is concern within the Senate about using volatile and less predictable taxes to offset a decrease in a very stable source of income,” Tarr said, noting that the Senate plan did not take into account severance taxes on natural resources.
The judiciary replied that his plan was not as dependent on severance taxes as it was on economic growth. The governor questioned the Senate’s plan to reintroduce things like the food tax.
“The biggest thing I think the Senate Plan is going to be a huge obstacle is just that – like it or not – it puts an incredible burden on those who are struggling the most. You will perceive it that way, ”Justice replied.
Eric Householder, chairman of House Finance, R-Berkeley, said he was giving the “way out” to the governor with the plan that has already passed the lower chamber.
“The House currently has a common sense – a moderate approach – that won’t ruin the West Virginia’s economy,” said Householder. “And it doesn’t burden anyone. Yes, it can take 12 years. But I think it’s a more reasonable approach. “
It was almost an hour and a half before Monday’s summit for the judiciary to hear from the Democrats – whose small number in the House and Senate could barely influence legislation at that session.
Stephen Baldwin, Chairman of the House Minority, D-Greenbrier, applauded the judiciary for bringing members of the two parties together – and for advocating the low-wage tax breaks included in the governor’s two plans, including of the new proposal “Justice 4 All”.
Baldwin also asked the judiciary what cuts to the state budget could be included in the new plan, including $ 25 million in funding for programs that have not yet been identified.
“I heard you talked about the possible cuts to the house plan over time,” Baldwin said. “We have obviously seen the size of the possible cuts – in terms of the Senate’s future budget plan – which I think are some pretty important things for you. So what could these look like? “
Justice said he had met with Tarr about possible cuts that would set back wasteful spending, and the governor said it was “easy”.
“Now I don’t really know what they are. And you know, we have to look at all of this and see what they are, ”he said.
Doug Skaff, Chairman of the Minority House, D-Kanawha, also thanked the judiciary for the opportunity to speak at the summit and said he was open to the idea of reducing income tax. However, Skaff said things felt too fast and he made it clear that there was still no consensus.
“Today I doubt the urgency that we have to hurry and do this. I would be everything to us if we met several times over the next few months, ”Skaff said. “Let’s do this right. Let’s get it right, let’s take part in the Senate’s plan, in the House’s plan, in your plan – let’s do it right. “
“I know we only have five days – and we can talk about it for 500 years,” said Justice at the end of the two-hour summit. “But it takes a lot of effort from everyone. I gave you everything in my soul to get us over the finish line. “