The largest income tax cut in state history is now headed to West Virginia Gov. Jim Justice for his consideration after it passed the House of Delegates, but a nonprofit group is questioning whether the state can foot the bill for these tax cuts.
House members OK'd the tax cuts Saturday after Senate suggestions. The West Virginia Center for Budget and Policy is questioning whether the state can afford the measure.
"The surpluses that we're experiencing right now in West Virginia are based on temporary factors like federal COVID relief, inflation, and high energy prices which are really volatile," Kelly Allen, executive director of the West Virginia Center for Budget and Policy, said. "The other piece of our surplus is essentially four years of underfunding public services."
These were concerns the Senate originally had with the House bill, which caused senators to pass their own tax cut plan, estimating the state had about $600 million to spend on a tax cut. Ultimately, the Senate passed the more expensive House bill by cutting its spending almost in half with amendments. Senate Finance Chair Eric Tarr, R-Putnam, told Eyewitness News last week that according to the Senate's number crunching, the state can afford the compromise with a PEIA fix.
"It saves the state $120 million a year, which allows us to bump up that tax cut," Tarr said.
The House bill has a 21.25% decrease in personal income taxes, and includes a 100% credit on personal vehicle taxes. The Senate passed the House bill with the changes last week, calling it a compromise between both chambers and the governor.
"I think it's a big win for both houses, and I think it's a big win for the governor and our citizens," Del. Eric Householder, R-Berkeley, said.
The West Virginia Center on Budget and Policy is not convinced, however, that the state has as much to spend as the Senate says and questions if the tax cut is the best way to spend surplus dollars.
"The other piece of our surplus is essentially four years of underfunding public services," Allen said.
Allen also pointed out that West Virginians voted against the vehicle tax cut by voting no on Amendment 2.
"Voters in November overwhelmingly rejected these, and they were still put into the final tax plan," Allen said.
But lawmakers Householder and Tarr are convinced that the bill will help West Virginia's economy grow, hopefully to the point that the state will not need a personal income tax.
"Every time the rates reduce, it's more money in people's pockets," Householder said. "More money in your pocket to spend how you see fit. It gives you more disposable income. It'll build wealth creation. It'll build job creation. It will allow more people to take risks and start a small business."