West Virginia passed a $4.6 billion state budget without a proposed income tax reduction, despite repeated efforts from the governor.
This is the second year the income tax reduction proposal has been initially passed by the House only to ultimately be turned down by the legislature.
The budget now moves to Governor Jim Justice’s desk for his consideration.
Justice has advocated for a reduction in income tax. When he proposed repealing personal income tax in March of 2021, Justice argued that the move would attract not just business but also people to the state which has been experiencing a continuous population decline for years.
“We have all the building blocks in our state,” Gov. Justice said in his statement. “We have an economy that’s truly on the launchpad, some of the greatest people you’ll find anywhere, who are smart, kind, faith-based, and hardworking people, along with four of the best seasons on Earth with more natural beauty than you could possibly imagine. But now we need to make a big move to put us over the top, so when people look at another population map 70 years from now, West Virginia will be right up there with the very top states in the country.”
He called ending personal income tax “the last piece of this puzzle.”
“That’s why I am proposing a plan to make this dream a reality starting with a 60% reduction in state income tax for year one,” Justice said.
If the measure had been adopted, West Virginia would have become the 10th state in America with no tax on personal income. The current list includes Alaska, Floria, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
North American Moving Services reported that during 2021, the second year of the COVID-19 pandemic, Florida and Tennessee became top relocation destinations for people moving out of high population density, high tax states.
Justice noted in his 2021 proposal that passing his resolution would make West Virginia “the first and only state in the mid-Atlantic or Northeast region to eliminate state income taxes.”
The state’s House of Representatives initially passed the legislation, known as House Bill 3300, in late March of last year.
Opponents of the measure argued that while personal income tax would be reduced, other taxes were increased. This included coal and gas severance taxes as well as taxes on alcohol, soda, and cigarettes.
A later version of the bill was later rejected by the House following significant revisions from the Senate, per WV Public Broadcasting.
In February 2022, the House passed a 10% reduction in personal income tax. The cut, House Bill 4007, was significantly lower than the governor’s previous proposal.
“The goal has always been to do an incremental approach, a more slower, more moderate approach,” House Finance Chairman Eric Householder said during an interview.
The bill was introduced in the Senate on Feb. 11 and referred to the Finance Committee.
The measure did not make it into the final $4.6 billion state budget passed a month later.
Speaking from the House floor, Speaker Roger Hanshaw implied the budget was good enough.
“It’s not the budget I would have written unilaterally, it may not be the budget you would have written unilaterally, probably was not the budget the chairman would have written unilaterally, but it’s where we are,” he said. “It’s a budget that those three parties who make up the governing body of West Virginia agree should be our spending priorities for Fiscal Year 2023.”
“I want to see our income taxes lowered,” Delegate Kathie Hess Crouse said, per WOWK-TV. “I would love to get us with other states to where we don’t have a state income tax. I think that will bring in more people, more businesses.”
Despite excluding the income tax reduction, the budget does meet the $4.6 billion mark requested by the governor.