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A Talk Of Budgets And Taxes

On this episode of The Legislature Today, lawmakers are mulling over countless tax proposals that would directly affect West Virginians and their wallets. Randy Yohe sat down with Kelly Allen, the executive director at the West Virginia Center on Budget and Policy, and House Speaker Roger Hanshaw, R-Clay, to discuss budgets and taxes.

On this episode of The Legislature Today, lawmakers are mulling over countless tax proposals that would directly affect West Virginians and their wallets. Randy Yohe sat down with Kelly Allen, the executive director at the West Virginia Center on Budget and Policy, and House Speaker Roger Hanshaw, R-Clay, to discuss budgets and taxes.

Also, in a Friday morning session, the Senate advanced legislation on the postal service, parental rights and pro-life education. Jack Walker has the story.

With controversy still bubbling over a proposed bill that could impose felony charges on a librarian or museum curator for exposing obscene material to a minor, it was Library Legislation Day at the Capitol.

This week, our high school correspondents look at the role of the lobbyist in the legislative process. Hollywood often portrays them as throwing large sums of money around, but even the smallest nonprofit organization can have a lobbyist.

Finally, former state senator John Pat Fanning died recently. Fanning was elected to the West Virginia Senate on three different occasions. His first term began in June 1968 and lasted until 1980. He came back to the Senate in 1984 for a single term that ended in 1988. His longest time in the Senate was from 1996 to 2012. He left his position in 2012. Bob Brunner brings us this profile.

Having trouble viewing the video below? Click here to watch it on YouTube.

The Legislature Today is West Virginia’s only television/radio simulcast devoted to covering the state’s 60-day regular legislative session.

Watch or listen to new episodes Monday through Friday at 6 p.m. on West Virginia Public Broadcasting.

Justice Lays Out Achievements, Wish List In Final State Of The State

Gov. Jim Justice’s final state of the state address Wednesday night highlighted the homespun phrases he’s known for, and millions of state surplus dollars proposed for a variety of projects.

He reminded all assembled for a joint session of the legislature what his dad said, and Justice often quotes: “Don’t confuse effort with accomplishment and there’s always something you can do.”

“I believe that if you give it to God above and you give your best and you give your best like nobody’s business,” he said. “Good things will happen.”

Justice touted his efforts to provide school choice, to enhance tourism and embrace diversifying the economy, adding his usual caveat of never forgetting fossil fuels.

“For those crazies that are out there in Lala Land that believe you can do it all with the fuels today,” Justice said. “Go back to your crazy you know, to be perfectly honest, I don’t want to starve to death in the dark.”

On the heels of the personal income tax cuts passed by the legislature last session, Justice proposed eliminating social security taxes on everyone and instituting a Child and Dependent Care Tax Credit

“Where folks that are struggling with daycare can at least write them off your taxes against your revenue,” he said. “We need this and we need this very badly and we need it right now.”

Justice proposed $50 million for a state-of-the-art agricultural lab at West Virginia State University. He also proposed $3 million for crisis pregnancy centers, $20 million for senior centers, $5 million for charter school growth, $150 million for the School Building Authority and $100 million to bolster West Virginia hospitals.

“This will help a lot of folks in our West Virginia hospitals all across our land,” he said.

Justice pointed to an end of the two-year state of emergency in the state Corrections system, with more than 350 National Guard members continuing to work in state jails and prisons.

“We are effective as we speak, downsizing the National Guard in our facilities,” Justice said. “And it is my hope beyond belief that by the end of the summer, the National Guard will be out of our facilities.”

A high school girls basketball coach for decades, Justice asked lawmakers to rethink the high school transfer rules passed during last year’s session that he said were creating lopsided scores and an uneven playing field.

“If we don’t watch out, we’re going to ruin, and I said ruin, high school sports in West Virginia,” he said. “This is going to really hurt us. I don’t know exactly what the right solution is. But I’m telling you there are some dadgum smart people in this room. And today I am absolutely pleading with you to figure it out.”

As Justice finished his address, Speaker of the House Roger Hanshaw, a Republican from Clay Country introduced House Bill 4025, the governor’s proposed budget appropriation for fiscal year 2025.

July Revenue Up, But Severance Taxes Off Considerably

July is often one of the slowest months for revenue collection, according to a press release from Gov. Jim Justice’s office, but general revenue collections were almost $8 million higher than expected. Total collections were $335 million.

The state has recorded record budget surpluses in recent years with the fiscal year that just ended totaling a $1.8 billion surplus. This has been achieved mostly through flat budget projections.

“Although our surplus this month isn’t as high as we’ve seen in the past, what this proves is that we’ve been minding the store properly by keeping our base budget flat,” Justice said. “We had phenomenal surpluses last year, and I strongly believe we are going to have a strong surplus this year too, despite the effects of ‘Bidenomics’ at work with runaway inflation eating into West Virginians’ pockets. It’s the perfect time to mind the store properly, which is what West Virginians elected me to do and I have done.”

Personal Income Tax collections for July were $13.9 million above estimate with collections of $145.6 million. Corporation Net Income Tax collections of $19 million were $8.5 million above estimate and 31.7 percent ahead of last year.

The other major sources of General Revenue for July included $93.6 million in Consumer Sales Tax, $25.5 million in Insurance Premium Tax revenues, and $13.7 million in Tobacco Products Excise Tax.

The press release also noted that severance taxes on coal and natural gas have gone down after a considerable drop in prices.

Severance Tax collections for July of this year are 93 percent lower than last July with a difference of more than $50 million.

For this year’s July severance taxes, the state received just $3,756,000 on a budget of $27,400,000.

Gaining New W.Va. Vehicle Property Tax Credit Calls For Correct Filing

The state advises that taxpayers pay the half year amount in 2023 to be eligible for the credit on the second half payment next year.

West Virginians are starting to receive their statements of personal property taxes due on vehicles, boats and RVs. But this year, the tax department says just pay the first half for now.

Beginning on January 1, 2024, taxpayers are eligible to claim a Motor Vehicle Property Tax Adjustment Credit. The first opportunity to claim this dollar-for-dollar credit will be on 2024 state income tax returns, filed in 2025, for all timely paid property taxes on vehicles during the 2024 calendar year.

The state advises that taxpayers pay the half year amount in 2023 to be eligible for the credit on the second half next year.

Timely in this case means by Oct. 1, 2023, for the first half payment, and April 1, 2024, for the second half payment. People who pay their taxes late won’t get the credit.

The recently passed legislation also includes a new homestead credit for disabled veterans that takes effect Jan. 1, 2024.

State tax officials suggest those qualifying disabled veterans should also wait to pay the second half of their real estate tax until 2024.

For links to tax forms and details on the net tax credits, click here.

W.Va. Sets Record With Fiscal Year-End Surplus, Results Questioned

The release noted that at the close of the fiscal year, June 30, 2023, at midnight, total collections for the revenue year will come in at approximately $6.5 billion – 10 percent ahead of prior year adjusted collections – marking the first time in state history that final collections for a single year have exceeded $6 billion.

Gov. Jim Justice announced on Friday that West Virginia’s cumulative revenue collections for Fiscal Year 2023 will come in at $1.8 billion over estimate. He said the budget surplus breaks the record for biggest single-year revenue surplus in state history for the second year in a row.

“I’m going to work with the Legislature to take what’s left unappropriated and continue to make wise investments in what we know will bring us more goodness,” Justice said in a press release. “Things like infrastructure, federal matches, and tourism, because the more we tell the world about West Virginia, the more people will want to live, work, and raise their families here.”

Looking at the fiscal 2023 year end numbers, Kelly Allen, the Executive Director of the West Virginia Center on Budget and Policy, called this a manufactured surplus. She said because Justice set revenue estimates artificially low, that essentially capped the size of the budget and left state financial and employment crisis situations unresolved.

“Legislators have to pass a balanced budget,” Allen said. “They have to stick with that top line number that the governor gave them when they passed the budget that had to stay at $4.8 billion, even though we knew more like $6 billion was going to come in. And we’re seeing the results of that with the budget crisis at WVU, with vacancies at our correctional facilities with other crises that are going on. We think of that surplus as a missed opportunity of taxpayer dollars that aren’t getting to where they’re supposed to go, because agencies and other organizations that depend on state dollars haven’t been able to build those into their budgets.”

In an income breakdown, the release noted:

Severance Tax collections set a record of nearly $950 million, a 24% increase from the prior year, with taxes from natural gas accounting for roughly 60% of total collections.
Corporation Net Income Tax collections grew at 14% and totaled $420 million, eclipsing a record set 15 years ago in 2008.
Personal Income Tax collections set a new record of $2.66 billion, despite a rate reduction of 21.25% that kicked in after the West Virginia Legislature passed and Gov. Justice signed HB 2526, the largest tax cut in State history.
Consumer Sales Tax reached an all-time record of $1.75 billion, growing by about 5.7% from last year, and Interest Income Tax Collections reached an all-time record of more than $132.4 million.

Allen said those record collections are skewed because responsible budgeting requires accounting for inflation’s impact on the budget.

“With inflation, the cost of everything goes up,” Allen said. “Things that the state pays for goes up – salaries for state workers, the cost of health insurance and medical costs, utilities. The costs go up every year a little bit just like they do for households. And by holding the budget flat, that means that the agencies and public organizations that rely on state dollars are able to do less and less with the same amount of money because the dollar just doesn’t go as far. It’s a problem for maintaining services, as we’re seeing in these crises and different sectors all over the state. But it also means that taxes that are being paid by all of us aren’t aren’t getting to the public services that we intended for them to pay for.”

The Justice press release added that, by law, a percentage of the year-end surplus must be transferred to the state’s rainy day fund, this year that amount is approximately $231 million. This leaves approximately $454 million unappropriated. June 2023 total collections are expected to come in at approximately $580 million.

Setting State Revenue Estimates Subject Of Debate

Revenue Secretary Dave Hardy said executive branch revenue estimate settings are ingrained in constitutional code.

West Virginia’s annual budget is based on revenue estimates that come from the governor’s office. The budget surplus comes from taxes collected above those revenue estimates. How those estimated amounts are determined garners differing points of view.

Sean O’Leary is the senior policy analyst at the West Virginia Center on Budget and Policy. He said when the Justice administration pointed out that this April’s general revenue collection beat the estimate by $319 million, the base budget estimate of $509 million was $284 million below last year’s actual collections of $791 million. O’ Leary called the surplus ”smoke and mirrors.”

“You’d have to assume that the governor and the budget office thought that the economy was going to collapse,” O’Leary said. “So these revenue estimates were set intentionally low in order to keep the budget low, and to generate these large surpluses.”

Revenue Secretary Dave Hardy said executive branch revenue estimate settings are ingrained in constitutional code.

“In 1968, West Virginians voted on a constitutional amendment,” Hardy said. “We call it the modern budget amendment, even though now it’s not so modern. It allows the governor to set the revenue estimates for the state of West Virginia. So every year, our governor sets the revenue estimates and then the legislature can only budget up to the limit that he sets.”

O’Leary said, unlike West Virginia, many states open up their revenue estimate setting process, getting many parties involved.

“When they do revenue estimates, they do a consensus forecast,” O’leary said. “Most other states do this where they have the tax department, someone from the university, some economists and they’ll have the legislature involved as well. And then you get more realistic revenue estimates.”

Gov. Jim Justice said his revenue estimates and budget drafting have all the transparency and outside involvement in the world.

Hardy said the governor presents a budget on the first night of the legislative session. “We literally spend 60 days talking to the legislators and our constituents and stakeholders on whether that’s the proper budget that the governor’s proposed at the back end of this process,” Hardy said.

Responding to the question of possibly setting revenue estimates too low, Justice said he’s a conservative businessman who minds the store by not being frivolous and wasteful.

“We took care of our counties the right way,” Justice said. “We have given significant pay raises four times, and the state is cooking because we didn’t go throwing money away on frivolous projects. But we sure got a bunch of folks out there that we can still help.”

Justice said a priority is stemming the corrections crisis. He wants to allocate pay raises to keep corrections officers on the job without seeking significantly higher paying positions in border states. He has said he wouldn’t call a special legislative session without a plan that has house and senate consensus. When Hardy was asked why corrections pay increase wasn’t put in the budget, he said there is some movement right now.

“There’s a plan that’s being formulated now in consultation with the legislature to meet that head on,” Hardy said. “But it can be done in a very intelligent way and it can be done through our base budget in fiscal year 2024.”

Hardy said, “throwing money at a problem is not the answer, having a plan and thinking it through is what you need to do.”