Justice, legislators at odds over two tax-cutting plans

It is a tale of two plans.

Although Gov. Jim Justice has called a special session for next week to introduce his plan for a 10 percent cut in the state personal income tax, questions remain about whether it will receive enough support to pass.

That is especially true in light of Amendment One (Property Tax Modernization Amendment), a Senate plan that will be on the ballot in November asking voters to give legislators the green light to pursue ending the equipment and inventory tax and personal property taxes (on vehicles).

Last week, Justice again pushed his plan over the personal property tax cut, which would cost the state more than $500 million a year to replace the money counties would lose if those taxes are eliminated.

“What if things get tough?” he said. “Our counties have a guaranteed income stream. We are going to give that up and bet on what’s about to happen. We don’t know what’s going to happen.”

The 10 percent personal income tax would put money into people’s pockets sooner, Justice said, and cost the state $254 million, money he said can be made up because of record surpluses, $1.3 billion this past fiscal year and about as much expected during the current fiscal year.

If legislators would approve the cut during a special session, it would kick in by October but be retroactive to Jan. 1.

Justice has been pushing ending the personal income tax for years and initiated a failed attempt during the 2021 legislative session that would have cut the tax by 50 percent starting this year.

However, that was tied to an increase in various taxes and fees to make up the $900 million a year in revenue that would be lost with the 50 percent cut. That plan was rejected by legislators, with the House eventually voting 100-0 against it.

Sen. Chandler Swope, R-6h District, was against the plan, too, saying the tax hikes would have hurt border counties disproportionally.

Swope, who agrees with Justice that eventually ending the personal income tax is a good tool to entice businesses and people to the state, said at this point he is pushing for ending the business and inventory and personal property taxes.

“This year, we (members of the Senate) are prioritizing equipment, inventory and vehicle property tax because it is one fourth as much money (the state would lose) and will immediately start growing the economy because it is the primary reason many companies don’t move to West Virginia,” he said recently. “Elimination of the personal income tax will take four or more years and will probably not generate population growth until it is completely eliminated.”

But Swope, who is chair of the Senate Economic Development Committee and a member of the Senate Finance Committee, said he would support the 10 percent personal income tax now “if projections show we can do both. As usual, I don’t like to commit to a final vote until I’ve seen all the numbers.”

Del. Marty Gearheart, R-Mercer County, is also taking a wait and see approach and said the “devil is in the details,” but he hopes he can support the personal income tax cut.

Gearheart is on the House Finance Committee.

Senate Finance Chairman Eric Tarr, R-Putnam County, however, minces no words about this lack of support for Justice’s proposed tax cut.

According to an article on MetroNews, he said it is not a “big plan” and will not have nearly the impact eliminating the personal property tax will have.

“The governor has been a big thinker for the state, and so when he comes out with ideas, usually they’re really big ideas. So when he’s talking about tax cuts, I would normally be excited, thinking he’s going to come out with a big plan. and this wasn’t a big plan,” Tarr said. “I really wish the governor would have come and talked to the Senate, anybody in the Senate, and the Senate leadership especially — before he goes in and says he’s going to call a special session on a very small tax cut. A 10 percent tax cut doesn’t move people. It doesn’t move capital. It’s about three hundred bucks a year on average for the people. Now $300 is a bunch of money for some people. But it’s nothing like the impact that eliminating the personal property tax can do.”

Personal property taxes on vehicles can be quite high, often exceeding $1,000 a year on newer cars and trucks.

Justice said last week details of his proposal to cut the personal property tax in the state by 10 percent are still being worked on, focusing on “tiering” of the tax, which is an attempt to benefit those making less money the most.

“We are trying to make it fair and equitable,” he said, and help those who need it the most. “But we still want to remember those who bring job opportunities to the state. We can’t flood the lower side and forget about the top side” because the top side creates jobs.

“It is a little complicated,” he said, but he wants to work “side by side with everyone” to get it passed.

He also recognized some may disagree with his plan.

But if legislators don’t want to do it, he said, “they will answer to the public” and they would miss “a great opportunity.”

While Justice’s plan may be seeing some obstacles, the plan to eliminate the equipment and vehicle personal property tax is also seeing some pushback, at least until a way is in place to reimburse counties for the lost revenue, which for Mercer County would be about $11 million a year.

Gearheart said that even if voters approve the amendment to basically allow legislators to cut the taxes, an ongoing stream of revenue must be in place to make sure the money is replaced each year down the road.

“Until I see the Senate plan I am not ready to jump on that boat,” he said.

Swope said legislators are working on a plan to “fully fund counties and schools at least as high or higher than current property tax revenues.”

“The goal is to publish this plan well in advance of the November election when voters will vote on Amendment One.”

That is something Mercer County Assessor wants to see as well.

“What do we do if they don’t have it?” he said recently of the ongoing revenue stream. “Nobody has gotten word from any senators on where the money is coming from.”

Cottle said that revenue would have to be in “perpetuity” because the counties must have it every year in order to provide all of the necessary service to residents, from education to law enforcement to parks.

— Contact Charles Boothe at cboothe@bdtonline.com