SB 392 would slash $250 million in revenue from the state budget annually to provide an additional round of personal income tax cuts, two-thirds of which would go to the top 20% wealthiest households in West Virginia.
Tax cuts are fine when the state has appropriately funded public services, but this tax cut proposal would come at the cost of a number of needs facing our children and families, our workers and small businesses.
Right now in West Virginia, we have the worst child welfare numbers in the country, and too many children are placed out-of-state due to too few services here at home. The governor proposed funding to bring one-tenth of our children home—how can we consider more tax cuts until we bring ALL our children home?
Across the state, more than 70 public schools have closed since 2019. School superintendents, researchers, and families have found that school funding is falling short when it comes to providing students with special needs and students in rural areas with an equal education to their peers. How could we consider tax cuts before addressing the education of our most vulnerable students?
In the past 2 years more than 200 family care providers have closed their doors and thousands of families struggle to afford high-quality child care, which ensures that parents can work and contribute to the economy. Tax cuts won’t solve that, but public investments in our children will.
Join us in telling our state lawmakers to reject further cuts to the income tax and to invest that $250 million into programs that better serve our everyday children and families. You can use this form to send them a message.
Check out this clip from Kelly’s recent interview where she details how previous income tax cuts have not led to the economic growth promised by proponents and why now is not the time to double down on failed tax cuts.
This week, the Senate Finance Committee approved SB 392, Governor Morrisey’s proposed 10 percent personal income tax cut at a cost of $250 million in revenue annually, as well as their changes to the FY 2027 budget. Like the governor’s budget, the Senate balances their budget by relying heavily on one-time surplus and supplemental funding, notably funding the entirety of the $300 million Hope Scholarship through surplus and supplemental funding.
The budget process so far has revealed that West Virginia has a structural budget deficit that is worsening, as there has yet to be a budget draft presented that funds all of the state’s ongoing programs and services without relying on dwindling one-time funds; this begs the question: how is the state contemplating more tax cuts that will further exacerbate future budget deficits?
Proposed Tax Cuts Overwhelmingly Benefit the Wealthy
Like the state and federal tax cuts of the past decade, Governor Morrisey’s proposed 10 percent income tax cut delivers 65 percent of the tax cut benefits to the wealthiest 20 percent of households, while reducing desperately needed state revenues by an estimated $250 million per year. The typical household in West Virginia (those in the middle 20 percent of household income) would see an average tax cut of only $136 per year, or just over $2 per week. In contrast, the wealthiest 1 percent in West Virginia (those making more than $558,000 per year) would see an annual tax cut averaging $4,663.
Growing Future Budget Gaps
Even before the 10 percent income tax cut was proposed, the state was already facing hundreds of millions in projected annual budget gaps according to the Governor’s Executive Budget report. With the initial five percent income tax cut that was included in the governor’s budget proposal, West Virginia was facing $1.2 billion in total budget gaps from FY 2028 to FY 2031. The additional five percent in income tax cuts more recently proposed pushes the total projected budget gaps to $1.7 billion from FY 2028 to FY 2031.
West Virginia Falling Short of Hitting Income Tax Trigger
When the West Virginia Legislature passed its initial income tax cut in 2023, it included an automatic mechanism designed to incrementally reduce personal income tax rates if specific state revenue goals had been met. If General Revenue collections (minus the severance tax) exceed the inflation-adjusted 2019 baseline, an automatic rate reduction is enacted, capped at 10 percent in a single year. The trigger is intended to gradually reduce the state personal income tax if economic growth exceeds the benchmark.
It’s critical to note that the Senate Finance Committee approved a full 10 percent income tax cut despite revenues falling hundreds of millions of dollars short of meeting the benchmark. FY 2019 General Revenue collections, minus the severance tax, totaled $5.41 billion (adjusting for inflation). FY 2025 General Revenue collections, minus the severance tax, totaled $5.08 billion, $327 million short of meeting the benchmark for an income tax rate reduction. The official FY 2026 General Revenue collections estimate, minus the severance tax, is $4.93 billion, which would be $482 million short of meeting the benchmark. The revenue estimate for FY 2026 is below FY 2025’s actual collections, demonstrating that overall revenue is estimated to decline even before potential additional tax cuts are enacted.
One-Time Funding for Permanent Hope Scholarship Expansion
With the 10 percent income tax cut, the Senate budget depends on hundreds of millions in surplus and supplemental funding to remain balanced. While the governor’s proposed budget used $170 million in surplus funding to pay for Medicaid, the Senate’s version instead uses $200 million in surplus funding plus an additional $100 million in supplementals to fund the entirety of the Hope Scholarship, which was largely funded through the General Revenue Fund in the governor’s proposed budget. No General Revenue funding is used for the Hope Scholarship in the Senate’s budget.
Risky Budget Moves to Pay for Tax Cuts
Even with just the initially proposed five percent income tax cut, the governor’s proposed budget relied heavily on using one-time surplus funding to remain balanced, setting the state up to face major budget gaps in the coming years. The Senate’s budget takes that same risky strategy and doubles down, funding the fastest growing program in the state budget entirely with one-time funding.
Depending on one-time funding for ongoing costs like the expansion of the Hope Scholarship in order to make room in the budget for tax cuts only spells trouble for future budgets, as evidenced by the growing future budget gaps. These tax cuts, which overwhelmingly favor the wealthy, undermine the state’s ability to invest in public services like public education and infrastructure that would actually improve prosperity for all of our people and make West Virginia more appealing for businesses and families alike.
Read Sean’s full blog post.
Check out this recent article including more details about the Senate’s budget plan and more insight from the WVCBP.
Over the course of just a few years, the Hope Scholarship voucher program has siphoned hundreds of millions of public tax dollars to fund private schooling and homeschooling for families that can largely already afford these options. This recent op-ed from a member of the Together for Public Schools WV coalition details why West Virginia urgently needs to adopt commonsense guardrails for the Hope Scholarship to ensure greater transparency and accountability, as well as more responsible use of taxpayer funds:
As an educator and a parent, it’s important to me that all our state’s children have access to a high quality education. I also know that as a state we face some important upcoming decisions in how we allocate our limited state taxpayer dollars via the budget.
A few years ago West Virginia adopted the Hope Scholarship with the intent to increase educational options for families who could not afford them or were in rural areas where few options were available. It was presented as a targeted way to improve education outcomes without vast new investments in our public schools.
Now, three years into the program, the costs have ballooned to over $100 million this year and could cost as much as $300 million next year. That exponential growth has come as many questions about the program remain unanswered, including whether it has succeeded in expanding choice to people who did not have it before, its impact on educational outcomes, and the cost it is having on our public school system which educates more than four out of five students in our state.
Certainly, the expanding wave of public school closures and the increasing number of school districts facing financial struggles raise alarms. Similarly, a lack of any publicly available data about academic achievement of recipients makes it difficult for lawmakers and the public to have the information needed to decide whether to expand or even continue the program. All West Virginia students have a right to a quality education, and citizens and taxpayers have a right to know how their money is being spent, who is benefiting and whether the Hope Scholarship voucher program is achieving its intended goals.
Other states that recently adopted voucher programs are facing similar questions. Tennessee recently launched its voucher program called the “Education Freedom Scholarship Program” with several commonsense guardrails, including an enrollment and overall cost cap, as well as a requirement that private schools receiving taxpayer funds be accredited and located in-state. Additionally, the funding does not go to microschools, learning pods or other forms of homeschooling that do not meet curriculum or educator certification requirements.
Despite those protections, many in Tennessee, like West Virginia, have raised concerns about the lack of transparency and reporting requirements to ensure the program is truly providing additional access and choice to those who did not have it before, or if it is just using taxpayer money to supplement wealthier families who could already afford private school tuition.
In Arizona, the school voucher program has blown up the state budget without expanding access or choice. Data there shows that more than two-thirds of the program’s recipients were already attending private school. Of note, that number is upwards of 90% in West Virginia according to the state treasurer’s office.
In Iowa, researchers have found that private schools are responding to their vouchers’ program by raising tuition, essentially defeating the purpose of offering vouchers in the first place. If private school tuition is repeatedly raised above the amount of the voucher, low-income families are right back where they started — unable to afford access.
West Virginia policymakers should look to the lessons learned in these states to craft commonsense accountability and protections for the Hope Scholarship. Unchecked vouchers’ programs that aren’t targeted to those who could not afford private school without it quickly grow out of control, crowding other state budget priorities while primarily helping subsidize private school for those who could already afford it. And without meaningful reporting requirements or assessments like public schools require, policymakers have no way to gauge the success of the program or to make fiscally responsible decisions about its continuation or expansion.
West Virginia can build on Tennessee’s model to cap the overall cost of the program; ensure only accredited private schools in the state can receive our state taxpayer dollars; and target the program to families who otherwise could not afford private schools. We can also work to ensure private schools receiving public taxpayer dollars are held to the same standards as our public schools: including reporting standardized test results publicly; accepting all students; following open meetings rules; and undergoing annual adults.
If our legislators do nothing, the Hope Scholarship will quickly expand beyond our ability to fund it at the cost of our public schools and other vital programs in our state budget.
Read the full op-ed.
The House Finance Committee has originated a bill, HB Org: Hope Scholarship, that calls for a cap and sensible guardrails on the Hope Scholarship voucher program. Please take a minute and use this form to contact your representatives and encourage them to support this legislation!
Black Policy Day is almost here! The event will be taking place this coming Tuesday, February 24.
Black Policy Day was established by Crystal Good (Black By God), Katonya Hart (Partnerships for the Arts & Education), and Dr. Shanequa Smith (WV Black Voter Impact Initiative) who shared a vision of creating space for historically oppressed and ignored groups to amplify their stories and participate in the policymaking process.
This free event welcomes all to visit the Capitol to engage with their state leaders, discuss the issues that are most impacting Black and minority communities, and learn how to take action to make impacts in their communities.
Throughout the day, there will be opportunities to engage in meetings with lawmakers, space for vendors and tabling opportunities, youth activities, and much more. Information about current opportunities and resources will be provided. The afternoon will include a youth-centered lunch event with accompanying activities. Child care is available all day.
You can register for free or make a donation to the event here.
You can learn more about Black Policy Day here.
HB 4005 increases risk for West Virginia’s working children. The legislation largely eliminates state-level protections defining hazardous occupations too dangerous for all minors to work in. In addition, the bill eliminates state-level protections limiting the time children can work with dangerous machinery, as well as requirements for direct supervision of dangerous work.
Minors are more likely than adults to be injured or killed on the job. Federal law prohibits minors from working in a list of jobs that have been deemed too dangerous for this group based on the fatal injury rate for adults in these occupations. Striking the protections currently enshrined in state law will take West Virginia backward on its commitment to protecting working children and will increase the risk of minors being injured or killed on the job.
Child labor law violations are on the rise across the country, and federal child labor protections are at serious risk of being eroded. West Virginia should prioritize protecting and advancing workers’ rights, including by strengthening child labor protections, not further weakening them to give employers—including unscrupulous ones—greater access to cheap labor.
View the full fact sheet in the images below or download it here.
Watch Seth’s quick explainer video on why HB 4005 is dangerous for our state’s children.
Tell you legislators to reject HB 4005 here.
Amid looming budget gaps and Governor Morrisey’s call for additional personal income tax cuts, tax cuts for the natural gas industry are moving through the West Virginia Legislature. SB 706 would cut the state’s severance tax on natural gas from 5 percent to 3.25 percent for newly drilled wells. The reduced rate would be in place for two years after a well is drilled, after which the rate would revert back to 5 percent. In addition, the bill would increase the local share of the natural gas severance tax from 10 percent to 15.5 percent, in an attempt to protect local governments from revenue losses. Due to the nature of West Virginia’s natural gas industry, even a temporary rate reduction could result in significant revenue losses for the state.
West Virginia currently levies a 5 percent severance tax on the value of natural gas produced in the state. Ninety percent of the revenue is used by the state government, while 10 percent is distributed back to county and local governments. In FY 2025, the state collected $228.0 million in natural gas severance tax revenue, with $22.0 million distributed to local governments.
While the purpose of the bill is to incentivize natural gas production by reducing the severance tax, natural gas production has been consistently growing in the state with the current rate, even with volatile swings in prices. Natural gas production has grown in West Virginia every year since 2004, even though the price has ranged from $3.20 per million cubic feet (mcf) to $10.32 per mcf during that time period. From 2008 to 2024, the price of natural gas fell from $10.32 per mcf to $4.38 per mcf, a decline of 57.6 percent. Despite the sharp decline in price, production in West Virginia increased by 120 percent during that same time period. The 5 percent severance tax is insignificant on production compared to changes in prices.
While SB 706 only applies to the first two years of production for newly drilled wells, this could still result in a significant loss of revenue compared to current law. Over 97 percent of oil and natural gas production in the state comes from horizontally drilled shale wells; an analysis of horizontal wells in Oklahoma found that half of a typical well’s projected lifetime oil and gas production will occur during its first three years, meaning the bulk of natural gas production in West Virginia would be taxed at a lower rate under SB 706.
With 97 percent of West Virginia’s oil and natural gas production coming from shale gas, and half of that production occurring in the first three years, a large portion of West Virginia’s production would be subject to the lower rate under SB 706, reducing revenue by tens of millions of dollars. Assuming that 50 percent of natural gas production would have been subject to the lower rate in FY 2025, total natural gas severance tax revenue would have been reduced by $36.1 million, an amount that would grow as production from shale wells continues to increase.
As natural gas production increases and personal income tax cuts continue to take their toll on state revenues, the natural gas severance tax is growing in importance to the state budget. From FY 2004 to FY 2014, the natural gas severance tax averaged 1.8 percent of the General Revenue fund. Between FY 2015 and FY 2020, that average increased to 2.3 percent, and since FY 2021 the natural gas severance tax has averaged 4.4 percent of of the General Revenue fund.
The severance tax is one of the most effective ways to ensure West Virginia benefits from its natural resource wealth. As a low-income state that is rich in natural resources, the revenue collected through the severance tax on resources like coal and natural gas plays an important role in funding education, health care, infrastructure, and other essential services provided at the state and local levels. Cutting the tax in a misguided attempt to incentivize production will only hurt the state’s ability to make those investments in our state and its people.
Read Sean’s full blog post.
Medicaid is an incredibly important program in West Virginia, providing health coverage to nearly 500,000 residents, supporting tens of thousands of health care jobs, and keeping the doors of hospitals and health care providers open all over the state. Major changes are coming to the program as a result of Congress’ passage of HR 1 (“One Big Beautiful Bill Act”), which–in addition to resulting in tens of thousands of West Virginians losing their health care coverage–will have major impacts on the state’s budget for years to come. As lawmakers consider the Fiscal Year (FY) 2027 budget, they are just beginning to unpack the coming consequences, though Morrisey administration officials have so far refused to share their internal analysis of some potential costs, even as they request lawmakers push through an additional round of tax cuts the state cannot afford.
The federal Medicaid changes that will impact West Virginia’s state budget can be put into two buckets: the phasedown and loss of key state Medicaid funding sources and increased administrative burden.
A forthcoming piece will highlight the SNAP costs being shifted onto the state budget.
Reduction of Key State Medicaid Funding Sources
Medicaid is a program jointly funded by the state and federal government, with the feds providing a matching rate to West Virginia of about three dollars for every one dollar the state puts in. West Virginia raises its state share of Medicaid funding via a combination of sources: the General Revenue fund, lottery funding, a medical services trust fund, and various provider taxes. The largest state budget burden from HR 1 will hit as a result of its required phasedown of provider tax rates.
In recent years, West Virginia policymakers have increased the state share of Medicaid funded via the provider tax and reduced reliance on the General Revenue fund, so much so that the state is spending less in the base budget for Medicaid than it did prior to the pandemic, even before adjusting for inflation.
In 2019, West Virginia spent $730 million in the base budget (General Revenue funding plus lottery funding) on its share of Medicaid, compared with just $686 million in FY 2025. Adjusted for inflation, state base budget spending on Medicaid shrunk by 24 percent over the period.
In FY 2019, provider tax revenues made up 24 percent of West Virginia’s total state share of Medicaid. By 2024, it had risen to 34 percent. This increased reliance on the provider tax helped state lawmakers keep the base budget “flat” in recent years as a way of stemming deep revenue losses from their personal income tax cuts. As a result of those permanent tax cuts, upcoming losses in the provider tax will be even more challenging to offset via the state budget.
The Morrisey administration provided some information on the budget impacts of these specific changes in its Executive Budget Report for FY 2027. In it they say, “The effect of this [provider tax] change will be a decrease in State Medicaid funds from this source, as well as a decrease in the corresponding matching federal funds,” followed by a table citing the specific provider tax reduction impact on the Medicaid program.
They go on to say, “In order to account for this decrease or to maintain the same level of federal funding, the General Revenue fund will have to provide additional funds to cover future increases in cost.”
The budget office’s analysis shows that West Virginia will see a steadily growing loss in provider tax collections in upcoming years beginning at $36 million in FY 2027 and ballooning to $178 million in FY 2031. If those funds are not replaced elsewhere, such as via the General Revenue budget, West Virginia will lose four times that much funding once accounting for the three lost federal dollars for every one state dollar that will not be drawn down as a result.
Despite this, in a budget presentation to the House Finance Committee, the Department of Human Services provided a six-year budget lookahead where they projected zero General Revenue budget growth in major Medicaid funding lines through FY 2031. The Morrisey administration’s six-year financial plan projects no growth in Medicaid until FY 2030, despite annual provider tax losses beginning years prior. It is unclear whether the Morrisey administration intends to make drastic Medicaid cuts equivalent to 14 percent of the entire Medicaid program or if lawmakers will be surprised when they find themselves asked to fill in provider tax holes with state budget dollars in future years after a six-year outlook that contained no substantial anticipated funding increases.
Significant New Costs to Administer New Bureaucratic Requirements
Under HR 1, states are also required to implement so-called “work-reporting requirements” for adults eligible for Medicaid via the expansion. In West Virginia, this will impact around 170,000 residents; the Medicaid agency will now have to assess whether they are meeting a minimum threshold of hours worked each month or qualify for an exemption from those requirements in order to maintain their health coverage. This is in addition to existing income verification and eligibility requirements.
While most West Virginians covered by the Medicaid expansion are working, they often work in low-wage jobs that can be inconsistent or seasonal without any control over how many hours they are given in a month. Further, a wide body of research shows that most coverage losses under this policy are among people who are working or should be exempt but have trouble successfully documenting that work with the Medicaid agency. As such, work reporting requirements been found to have no impact on increasing employment but do result in many eligible people losing their health coverage.
In addition to the significant updates necessary to West Virginia’s eligibility system to implement these new requirements, HR 1 also requires states to redetermine the eligibility of expansion enrollees twice as often as they currently do.
Updating state eligibility systems to track work hours will pose significant new costs to states. While West Virginia officials have thus far declined to provide an estimate of how much it might cost to update the state’s Medicaid technology to track compliance with work requirements, officials in other states are beginning to name the costs. In North Carolina, officials estimate the increased redeterminations alone will require more state staff and cost the state around $30 million annually.
Further, they note a significant increase in vendor costs, including for the income verification services they use via Equifax’s “the Work Number,” a database West Virginia relies on that provides instant verification of Medicaid applicants’ wages and work hours. US Senators recently accused Equifax of price gouging, or dramatically increasing their prices, in advance of the new work reporting requirements. Some states pay between $7- $20 per ping, each time they check an individual’s wages. With Congress requiring states to double their redeterminations, the cost of West Virginia’s contract with Equifax will also likely double even before accounting for contract cost increases.
Other states scrambling to implement work reporting requirements into their Medicaid systems are also beginning to share cost estimates. A New York official estimated a $500 million price tag to implement and administer the new requirements. A GAO analysis found state cost estimates ranging from $10 million to over $270 million to implement and administer work reporting requirements. Congress did allocate funding for implementation but it was just $200 million, surely falling far short of the cost estimates emerging across states, meaning states will be on the hook for a significant chunk of the cost.
Building complex new systems to implement work reporting requirements is highly costly for states but very lucrative for private firms that contract to provide the technology. Since Georgia implemented Medicaid work requirements in 2020, they have spent twice as much contracting with Deloitte to build and administer their eligibility system as they have on health care for Georgians.
Lawmakers Must Reckon With These Coming Changes Now
Combined, the provisions of HR 1 will blow a hole in West Virginia’s General Revenue budget to the tune of hundreds of millions of dollars annually once fully implemented. On top of this, West Virginia lawmakers have already been presented with a budget from the Morrisey administration that proposes using dwindling one-time surplus dollars to fund ongoing Medicaid costs. If lawmakers do not prioritize filling these holes with state budget dollars, the magnitude of Medicaid cuts the state will face will have huge repercussions for West Virginians and our broader economy. State lawmakers have a responsibility to begin to grapple now with upcoming budget needs, particularly as the Morrisey administration tries to strong-arm them into more tax cuts that mostly benefit the state’s wealthiest households.
Read Kelly’s full blog post.
West Virginia is in a maternal health crisis and families are feeling the impact every single day.
Over the last two decades, our state has lost half of its labor and delivery units, with at least 17 birthing units closing since 2006. That means more pregnant people traveling longer distances just to get prenatal care or safely deliver their baby.
And the data is alarming:
– Babies born to mothers who received no prenatal care are 3 times more likely to die in their first year of life.
– 22% of West Virginians don’t have a birthing hospital within 30 minutes of home.
These aren’t just statistics. It’s a crisis we can’t afford to ignore.
Do you live in a county without a nearby birthing unit? Have you had to travel long distances for maternal care or to give birth? We want to hear your story! Your voice matters and it could help save lives.
Share your story here.
Watch Rhonda’s video explainer on West Virginia’s maternal health crisis here.
Learn more in our recent publication here.
