CHARLESTON — The West Virginia Legislature’s work on Gov. Jim Justice’s personal income tax reduction stalled out Monday afternoon after Justice called an audible on a special legislative session.
About 12 minutes after Senate President Craig Blair, R-Berkeley, convened for the session, Justice announced he was amending his special session proclamation to add abortion laws to the agenda.
After Justice’s announcement, members of the Senate and House of Delegates did little to advance his proposal to reduce the state’s personal income tax rate.
Delegates introduced House Bill 301, which contains Justice’s proposal, and referred it to the House Finance Committee.
House Finance Committee leaders canceled a 5 p.m. meeting during which they were set to consider the bill.
The committee will meet at 9 a.m. Tuesday to consider the bill.
Instead, the House Health and Human Services Committee met to craft an abortion bill in response to Justice’s new special session agenda.
The Senate convened twice Monday for a total of roughly 15 minutes. It is scheduled to reconvene at 10 a.m. Tuesday for the second day of the special legislative session.
The House will reconvene at 11 a.m. Tuesday.
Monday’s action, or lack thereof, was the latest in Justice’s two-years-long mission to eliminate, or at least reduce, the state’s personal income tax.
The proposal he submitted to the Legislature would reduce the income tax rate by 10%.
Justice issued the proclamation calling the special session to have lawmakers consider reducing the personal income on Wednesday, saying the state’s $1.3 billion budget surplus for Fiscal Year 2022, which ended June 30, would help offset the $254 million in revenue the state is estimated to lose after the rate reduction.
Justice used very specific language in his special session proclamation. He included the exact language and amount by which he wants to decrease the personal income tax in the proclamation — the same language in the bill he submitted to the Legislature.
In effect, that specific wording prevents lawmakers from considering decreases to any other taxes or any other decreases to the personal income tax.
The West Virginia Constitution prevents legislators from considering any business other than what the governor includes in a proclamation for a special legislative session.
Before Justice’s bill was filed in the Legislature, talks behind closed doors indicated some hesitation among Senate leaders.
The behind-closed-doors talks came to light Friday when Justice said he and the Senate were opposed when it came to the best tax plan for West Virginia.
“From the Senate side, our Senate president is really, really hung up on the property tax on vehicles and the machinery and inventory tax,” Justice said during his briefing usually meant to update West Virginians on the status of, and resources for, COVID-19 in the state. “And to tell it like it is, we’d like in this world to be able to do any and everything. I, frankly, have a completely opposite opinion from the standpoint that I’m not driven by anything as far as influence or lobbyists or anything.”
Justice put his latest income tax reduction proposal before the Legislature with a little less than four months until West Virginians are set to vote on an amendment to the state Constitution that would allow the Legislature to cut taxes on business and inventory and machine taxes.
The measure will be on the General Election ballot.
The Legislature adopted the resolution, House Joint Resolution 3, during the 2021 Regular Legislative Session.
After Justice’s comments Friday, Blair and Senate Finance Chairman Eric Tarr, R-Putnam, sent a letter to Justice inviting him to meet with the Republican Majority Caucus in the Senate Sunday.
“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 wrote in the letter.
Justice, a Republican, on Sunday released a statement saying he met with the Senate Republican Caucus and had a “cordial, 90-minute meeting” with Blair.
“Gov. Justice has repeatedly and consistently mentioned publicly that he welcomes meaningful discussions with the Legislature regarding repealing the personal income tax and other ways to move West Virginia forward,” according to the release from the Governor’s Office. “Any insinuation otherwise is incorrect.”
On the lowest level, the governor’s proposal decreases taxable income for individuals and married people making less than a total $10,000 from 3% to 2%.
On the higher end, individuals and married couples making more than $60,000 a year would see a decrease from $2,775 plus 6.5% of their income that’s in excess of $60,000, to $2,485 plus 5.98% of their income over $60,000.
Justice’s current proposal to reduce the income tax is a walk back from his original proposal in 2021 to eliminate the tax altogether.
West Virginia ended the 2021-22 fiscal year with a $1.3 billion surplus, created by Justice underestimating how much money the state would collect for the fiscal year.
The cut would be retroactively effective on Jan. 1, 2022.
The governor said the 10% cut is the maximum amount the state could cut the personal income tax without running afoul of regulations that came with the $4 billion in federal money from the American Rescue Plan Act.
About 42.5% of the state’s revenue last fiscal year came from personal income tax collection, which accounted for $2.5 billion of the state’s revenue.
Justice twice has failed to get the Legislature to repeal the personal income tax during the past two legislative sessions. The House of Delegates rejected it in a unanimous vote in 2021, after Justice criticized House Republicans for refusing to take up the measure.
The House adopted a provision during the 2022 legislative session that would have incrementally repealed the personal income tax and put $265 million in anticipated surplus revenue in a special fund to offset lost revenue from phasing out West Virginia’s personal income tax. The measure died in the Senate.
Justice approved the bulk of the fiscal year 2023 budget legislators presented to him in March. He vetoed one line of the budget that House Republicans had used to set aside $265 million for future tax cuts, saying there was “absolutely no reason to set aside surplus revenues in a random agency without any general law purpose.”