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One week down at the Legislature

As I said last week, all eyes are on Gov. Jim Justice’s plans to phase out the personal income tax. I knew he would mention it in his State of the State address last week, though I was surprised by the amount of detail he went into.

But even with the details he did go into, there are still a lot of unknowns. No bills have yet to be introduced on Justice’s behalf addressing the phase-out plan. We know the rates for high-income earners will drop by one-third and the rate for low-income earners would be cut in half in his proposal, but we don’t know the dollar amount that separates low- and high-income earners.

According to the Tax Foundation, West Virginia’s personal income tax brackets are broken down into five categories, with individual earners and those married and filing jointly making more than $60,000 per year paying a 6.5 percent tax rate. The lowest rate for those making less than $10,000 is 3 percent.

The good part is Justice will keep the state budget at current levels for the remainder of his four-year second term. But to do that, Justice wants to raise the consumer sales and use tax from 6 percent to 7.5 percent (it goes higher than that for cities with their own sales taxes). Justice wants a wealth tax, I presume to try to capture tax dollars from West Virginians who escape to Florida.

I imagine Big Tobacco is used to seeing taxes on their products go up, but I can tell you Big Beverage is on the warpath. Justice wants to raise taxes on tobacco and soda to help ease the transition away from the personal income tax.

Hopefully the Justice administration will get their bills introduced so we can see the specifics or Republican lawmakers get moving on their own versions.

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Upsetting some lawmakers is Justice wanting to create a third Rainy Day Fund to cover possible revenue shortfalls from a personal income tax phase-out. It appears he’s still hoping beyond hope that the federal government will relax rules on how to spend the previous $1.25 billion federal C.A.R.E.S. Act meant for reimbursement of state and local government COVID-19 expenses.

We still have more than $600 million of that unspent sitting in an account managed by the State Treasurer’s Office in case we need to pay off a federal interest-free loan funding our unemployment trust fund plus have $200 million to replenish the fund. Justice is banking on the Biden administration forgiving those loans, freeing up that $600 million to put into the new Rainy Day “bucket.”

Justice last year kept telling the press and the public that the Trump administration would ease restrictions on the $1.25 billion so that states could use those funds for state and local government tax revenue shortfalls. That never happened, not because Donald Trump didn’t want to help his buddy Jim but because he wanted to stick it to blue states drowning in state pension obligations.

It was brought to my attention that Justice has been extra friendly to Biden during his coronavirus briefings. If anyone is likely to ease spending rules for C.A.R.E.S. and even the new $1.9 trillion COVID-19 package being considered by Congress, it’s Biden. But betting on being able to use that remaining $600 million is risky.

It also looks bad to some, who believe Justice could have provided more relief to small businesses, help to customers still struggling to pay utilities, and bonuses for frontline workers.

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If the session feels like it is moving fast, it is. We’re already seeing big bills being pushed out of committees. The Legislature even met Saturday, which never happens this early in the session. House Speaker Roger Hanshaw, R-Clay, said they would be aggressive in getting legislation out the door. With COVID-19, lawmakers want to get to work quickly and leave.The process itself isn’t any more rushed, with debate in committees still happening to some extent, but it does seem more subdued. I suspect Democratic lawmakers are saving their best arguments for the House and Senate floors.

I am pleased to see that even with COVID-19 restrictions and rules preventing the public at large from entering the building (a Jim Justice executive order controls that, not the Legislature) that people are still able to get in to testify on bills.

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Attorney John Bryan is now 0-3 on lawsuit victories against the Justice administration.

Last week, the state Supreme Court ruled against him on the lawsuit over the vacancy rules when appointing a new delegate. The same day, a federal court dismissed his lawsuit on behalf of a Putnam County business challenging Justice’s executive order authority. And an attempt last July by Bryan and former lawmaker S. Marshall Wilson to have the Supreme Court force Justice to call the Legislature into special session during the pandemic was never even heard.

As they say in baseball, three strikes and you’re out.

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Last, but not least, registered Republicans now outnumber registered Democrats in West Virginia for the first time since before the Great Depression. According to the West Virginia Secretary of State’s Office, there are 448,924 registered Republicans, making up 37.81 percent of all registered voters in West Virginia as of Feb. 11. There are now 444,609 registered Democrats, making up 36.46 percent of voters.

(Adams is the state government reporter for Ogden Newspapers. He can be contacted at sadams@newsandsentinel.com)

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