Justice, Blair butting heads over W.Va. tax reform
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CHARLESTON - With a special session just days away, it's looking like Gov. Jim Justice and the Senate Republican leadership are butting heads over the best course of action on tax reform.
In a letter to Justice dated Friday, Senate President Craig Blair, R-Berkeley, and Senate Finance Committee Chairman Eric Tarr, R-Putnam, invited Justice to attend a meeting of the Senate Republican caucus at 6 p.m. Sunday to discuss his 10 percent aggregate cut to personal income tax rates.
Justice issued a proclamation Wednesday for a special session of the Legislature beginning at noon Monday for lawmakers to consider his personal income tax cut proposal, which would return $254 million to taxpayers retroactive to Jan. 1 if lawmakers approve his bill.
In their letter, Blair and Tarr said Justice's tax cut plan would only amount to around $9 per taxpayer. Both would prefer focusing efforts on passing Amendment 2, which would amend the state Constitution to allow changes to certain tangible personal property tax rates.
"The Senate majority caucus is optimistic that it would be productive to discuss and compare your income tax bill, which proposes to reduce the average West Virginian's income tax deduction by approximately $9 per paycheck, and the Senate plan for eliminating the personal property tax in West Virginia," Blair and Tarr wrote.
"We have repeatedly attempted to engage in meaningful conversation with you, as we believe the leaders of this state should speak directly and not through intermediaries," Blair and Tarr continued.
If voters approve the amendment in November, lawmakers could begin phasing out tangible personal property taxes on machinery and equipment, inventory and motor vehicles. County governments and county school systems rely on those tax revenues, though Republican senators are working on a plan to keep counties and schools whole by replacing those property tax revenues directly from the general revenue budget.
Blair and Tarr told Justice there are other components to their plan to eliminate personal property taxes, including a long-term goal of completely phasing out the personal income tax, which brings in approximately half of the state's general revenue fund collections. Personal income tax collections for the fiscal year that ended in June were $2.5 billion. Total general revenue collections for the last fiscal year were $5.9 billion, leaving the state with a $1.3 billion surplus.
"As you may or may not be aware, the personal property tax plan endorsed by the Senate majority caucus contains various components, including phasing down the personal income tax with economic triggers, refunding past vehicle taxes paid, paying increased retirement to our senior public retirees, and backfilling counties in perpetuity by at least one million dollars more than their 2021 total assessments," Blair and Tarr wrote. "All this is accomplished without raising another tax."
Speaking during a virtual briefing with reporters Friday morning, Justice said he did not approve of the Senate majority's plan to focus on eliminating personal property taxes and accused Blair of being influenced by lobbyists.
"Our Senate president is really, really hung up on the property tax on vehicles and the machinery and inventory tax," Justice said. "I frankly have a completely opposite opinion from the standpoint of I'm not driven by anything as far as influence or lobbyists or anything."
In Justice's proposed plan, those earning $60,000 or more in personal income will see their rates decrease from 6.5 percent to 5.98 percent, with those earning between $40,000 and $60,000 seeing rates decrease from 6 percent to 5.5 percent, both representing a nearly half a percent decrease. Those earning $10,000 or less would see rates decrease from 3 percent to 2 percent, a full 1 percent decrease.
"I personally believe if you want people to come to West Virginia, if you want real growth within our state, without any question we need to get on some level of pathway to try to get rid of our personal income tax or at least lower it," Justice said. "This is just the first step."
Blair and Tarr also invited House Speaker Roger Hanshaw, R-Clay, and House Finance Committee Chairman Eric Householder, R-Berkeley, to the Senate Republican caucus meeting Sunday night. Justice's proposal is similar to House Bill 4007, introduced by Householder, that also cut personal income tax rates by a combined 10 percent. That bill passed the House along party lines, but was never taken up by the Senate during the 2022 legislative session.
(Adams can be contacted at sadams@newsandsentinel.com)