Earlier this month, Governor Jim Justice announced that lawmakers had had ample time to reach consensus on his proposal to cut the state’s income tax for the third time in 18 months. In fact, the first two rounds of tax cuts have not even been fully implemented yet, and the state is already experiencing historic revenue losses and huge spending needs after years of austerity.
The West Virginia Center on Budget and Policy fresh analysis notes that the change in tax revenues from fiscal year 2023 to fiscal year 2024—due largely to the 2023 tax cuts—was the largest year-over-year revenue decline West Virginia has seen in 25 years, surpassing even the revenue losses during the Great Recession. And because already enacted tax cuts totaling approximately $310 million annually still need to be phased in, revenues will continue to decline, making it even more complex for policymakers to meet the state’s significant spending needs. In fact, the Department of Justice Treasury expects revenues to decline an additional $500 million this fiscal year (fiscal year 2025) compared to fiscal year 2024.
But revenue losses are more than just numbers on paper – they mean less money to fund our public schools, health care, infrastructure and other public goods that families and businesses depend on.
The governor’s proposal would reduce state revenues even further – by another $114 million annually. The chairman of the Senate Finance Committee, Republican Eric Tarr described in July on what lawmakers would need to do to offset a third income tax cut after years of stagnant budgets in which public services have already been cut to the limit: “Either you have to cut spending so drastically that you can’t afford it — hell, I mean, that’s going to be politically complex and there’s going to be citizen uproar over some of these services… [or] You have to find somewhere else to raise a tax.”
That fact should raise stern concerns among politicians considering the governor’s proposal to cut the income tax by another 5 percent. According to an analysis by the Institute for Taxation and Economic Policy (ITEP), that would mean about a dollar a week (or $53 a year) for the average West Virginia household in their districts, while the richest 1 percent of West Virginians would see about $2,100 a year.
How much bloodier could the state budget get if the average West Virginia family gets just $1 a week? We’ve already seen the impact of the first round of tax cuts on state-funded programs: Dozens of daycare centers and nursing homes have already closed this year, leaving hundreds of families without access to the child care they need to work.
New data shows that West Virginia ranks last in the nation in teacher compensation, even after recent raises (which were often offset by increased PEIA costs). Teacher pay has a significant impact on families with children in our public schools, especially in border districts where teachers often only have to drive a few miles to see a dramatic raise or even a doubling of their salary.
Emergency medical services (EMS) providers warn that their response times are being impacted by a lack of stable funding, which has had disastrous and even fatal effects in rural parts of the state. In addition to the literally life-threatening impact of the problem, emergency medical services response times are also effects the cost of home insurance premiums.
Each of these examples is the result of a political decision to prioritize income tax cuts – two-thirds of which benefited the wealthiest 20 percent of households – over investments in public services that support all families and promote economic growth.
For families who have lost their child care provider or are facing the loss of their child care subsidy, a dollar a week won’t mean much. The same is true for members of a community facing school consolidation or teacher shortages, or for an individual who loses a loved one because the ambulance couldn’t arrive in time to save them. In addition, households whose homeowners insurance has increased exponentially due to delayed fire and emergency response times will likely spend significantly more on fresh insurance costs than the dollar a week they gain.
While “tax cuts” in a vacuum might do well in the polls, the Justice Department and state lawmakers have a responsibility to the West Virginians they serve to be truthful about the bloody costs—which are always passed on to budgets when public services deteriorate.
