Earlier this week the House Finance committee passed SB 841, hastily drafted legislation that would make major changes to the state’s unemployment insurance system to the detriment of the state’s workers. These changes include cutting the number of weeks of unemployment benefits available to the state’s unemployed workers, reducing overall benefits for many workers, and increasing bureaucratic red tape. One justification for cutting the number of weeks of unemployment benefits is that it would help keep the state’s unemployment trust fund solvent. However, these concerns are dramatically overblown. In fact, the state’s unemployment trust fund is healthier than it has ever been in recent years.
As of March 5, 2024, West Virginia’s unemployment trust fund had a balance of $387.3 million, one of its highest balances on record and over $25 million more than it ended March of 2023 with. West Virginia began 2024 with the highest trust fund balance by far than it had in any year in over a decade, with a balance of $407 million.
While the trust fund has declined from $407 million at the end of 2023 to $387 million in March of 2024, that decline is typical and due to timing issues and seasonal factors. First, unemployment typically spikes in the beginning of the year as construction projects are paused and seasonal retail employees are laid off. This past year, the unadjusted unemployment rate jumped from 3.7 percent in September to 4.7 percent in January, while the year before it jumped from 3.3 percent to 4.1 percent, before falling back down to 3.3 percent. This means more money is being paid out of the trust fund in the first few months of the year due to these seasonal factors.
In addition, timing issues with businesses paying their unemployment taxes artificially depress the trust fund in the beginning of the year. Businesses pay an average tax of 2.7 percent on the first $9,000 in wages for each employee. Since most businesses pay their taxes quarterly, most of their unemployment tax is paid in April and May, making February and March the lowest months of the year for receipts, as few payments into the trust fund have been made from the last quarter of the prior year.
One measure of trust fund solvency used by the U.S. Department of Labor is the trust fund balance as a share of total wages. Using this measure, West Virginia ranks well, and better than several states that use indexing. West Virginia’s measure of 1.4 percent ranks 17th best among the 50 states and is better than numerous states with fewer weeks of benefits, including of Alabama (1.0 percent), Kentucky (0.9 percent), Missouri (0.6 percent), Oklahoma (0.6 percent), and Florida (0.5 percent), and is tied with North Carolina at 1.4 percent. Montana, the one state that offers more than 26 weeks of benefits, is ranked 7th best in trust fund solvency.
Another factor benefiting West Virginia’s trust fund solvency is the state’s relatively modest benefit amount. Average weekly benefits in West Virginia are $422. That is lower than three of its neighboring states and below the national average of $437. Lower than average benefits also contribute to the state’s solvency measure.
The past two years have shown in multiple ways how unemployment insurance reduces hardship but doesn’t reduce labor force participation or harm the state’s economy. However, cutting the number of weeks available to workers in an attempt to protect the trust fund is misguided. If lawmakers want to have a serious conversation about long-term solvency of the trust fund, it would be welcomed by parties on all sides, who want to ensure the benefits are available to workers who need them. But rushing a flawed plan with many potential unintended consequences through under the false premise of a crisis would be a mistake.
Read Sean’s full blog post.
Despite more than 1,500 workers receiving layoff notices in the last two weeks, West Virginia legislators are proposing slashing unemployment insurance (UI) benefits. These cuts would have a devastating impact on families and would further harm our state’s economy.
As mentioned in the entry above, the House Finance committee recently passed SB 841, a bill that would drastically reduce unemployment benefits.
Withholding economic supports for families leads to bad outcomes for children, including increased likelihood that they will become involved in the child welfare system when their parents have trouble paying their bills.
In recent weeks, we have seen announcements of significant layoffs for businesses like Cleveland Cliffs (formerly Weirton Steel) in Weirton affecting up to 900 workers, and then Allegheny Wood Products closed its doors and eliminated about 600 jobs at multiple locations.
Legislators should stand beside these workers and their families – not make matters worse.
The proposed cuts to UI benefits would be a cruel and heartless blow to those who are already struggling. Cutting UI benefits harms our state’s economy. UI benefits help to boost consumer spending, which supports local businesses and jobs. Cutting these benefits would reduce consumer spending and lead to further job losses.
Please reach out to your delegates using our form and urge them to oppose cuts to unemployment benefits and vote no on SB 841. These benefits are a vital lifeline for struggling families and are essential to our state’s economy.
Learn more about the difficulties SB 841 would generate in this recent article, featuring insight from WVCBP policy outreach director, Seth DiStefano.
After 100 years of progress, child labor violations in the United States are soaring, and corporate interest groups are pushing coordinated efforts across states to roll back critical child labor protections, with at least 12 states enacting harmful rollbacks. In West Virginia, the House of Delegates passed HB 5159, which would weaken child labor protections for 14- and 15-year-olds at the urging of the Foundation for Government Accountability, one of the corporate-backed groups behind this nationwide effort. It will now be up for consideration in the state Senate.
HB 5159 Would Eliminate Protections for Youngest Youth Workers
HB 5159 would repeal the current work permit process that is in place for 14- and 15-year-old youth workers. The work permit contains a section completed by the youth’s employer that includes a detailed description of tasks and equipment the child will be completing and using, provides an intended work schedule showing specific dates and hours, and assures that the minor will receive their legally required breaks. This documentation must be on file and available to the West Virginia Department of Labor, which enforces the state’s child labor laws. Additionally, the work permit is signed off on by a parent or guardian and a representative from the child’s school. Together, these sections ensure that all parties are aware of the law and the family’s rights and that any job will not interfere with a young person’s education. It also serves as a paper trail and can aid in investigations of possible child labor law violations. From there, the school district signs off on the permit after ensuring that the work and hours are permissible under state law.
HB 5159 replaces that process with an age certificate for 14- and 15-year-olds, which is to be issued by the State Commissioner of Labor. An amendment added in committee does add a provision for written parental consent, but without the detailed description of work and hours from the employer, that consent will be far less informed than it is under the current work permit process. Further, it is unclear if the age certificate is required under the current bill language. Because the age certificate is optional under current law for 16- and 17-year-olds—it is not required but must be made available on request—it is unclear if it would be required or merely optional for 14- and 15-year-olds under the proposal.
HB 5159 Increases Risks of Dangerous Work, School Dropouts
With the elimination of the work permit, the state and federal agencies tasked with child labor compliance will have less information available to investigate potential violations. Some evidence suggests that states with work permits in place have fewer child labor violations in the first place because employers have a clearer understanding of what is and is not allowed under the law. In addition, if HB 5159 becomes law parents will have less opportunity to understand permissible state law and what types of work and hours their young children are eligible for. This makes it more likely that youth workers will be placed in dangerous jobs in which they could be injured or even killed.
Research also shows that teenagers who spend long hours in jobs are more likely to drop out of high school than those who worked less or did not work at all. Reducing informed consent among parents and employers of youth makes it more likely that 14- and 15-year-olds will be placed in work environments that violate state and federal child labor laws.
HB 5162 Also Puts Youth at Risk of Hazardous Jobs
HB 5162 would weaken child labor protections for teens under the guise of a “Youth Apprenticeship Program.” In actuality, it creates a carveout wherein minors could work in particularly hazardous industries currently barred by both state and federal law, including extremely dangerous roofing, trenching, and excavating. While language in the bill requires that the program complies with the Fair Labor Standards Act (FLSA), the program could still put youth in hazardous jobs for very small companies that do not fall under the FLSA. Typically, businesses that have less than $500,000 in annual receipts do not fall under the FLSA. Nationally, that means that more than half of construction firms would be exempt from their rules.
Young workers have high rates of job-related injuries, in part due to limited or no prior work experience and lack of safety training. Additionally, youth workers are often uncomfortable questioning when a situation does not feel safe or appropriate. It is incumbent on government to require that robust protections are in place to ensure that young people are safe in the workplace and are fulfilling their commitment to education, which is essential to their long-term life success. West Virginia lawmakers must reject the numerous efforts of corporate interest groups to reduce protections for children and exploit our young people.
Read Kelly’s full blog post.
Last week we got our first look at the House and Senate versions of the FY 2025 budget. Both the Senate and the House proposed budgets came in far below the governor’s proposed budget, even as the governor’s budget proposal is $450 million below pre-pandemic FY 2019 expenditures after adjusting for inflation. And while legislative leaders from both chambers blamed their ‘skinny’ budget proposals on uncertainty due to negotiations with the federal government about education spending, the state’s noncompliance came about due to underfunding public education and higher education in the state budget to begin with.
In 2023, West Virginia lawmakers passed significant income tax cuts, which were justified by revenue surpluses that were driven by temporary factors and years of flat state budgets. But lawmakers were primarily able to maintain those flat budgets thanks to significant federal dollars coming into the state via COVID-relief funds. That increased federal funding for Medicaid, public education, and child care, to name a few examples. In each of those cases, lawmakers were able to hold flat or even reduce state spending for those programs, effectively using federal COVID dollars to supplant state funds.
That seems to be the basis for the current clawback threat the state is reportedly facing with the United States Department of Education (USDE). As with many other federal programs, the COVID-era ESSER funding in the American Rescue Plan (ARP) required states to comply with a Maintenance of Effort (MOE) provision. That meant that in FYs 2022 and 2023, West Virginia had to maintain state funding for elementary and secondary education and higher education at proportional levels to that which they provided in pre-pandemic years.
West Virginia requested and received a waiver from the MOE provisions in FY 2022 on the basis of declining student enrollment being behind the reduction in state spending. But in FY 2023, the state’s education spending declined significantly as a share of the state’s overall budget expenditures, leaving the state even further out of compliance with the MOE requirement and creating the current situation where the state must negotiate with the USDE to either increase education spending or return federal dollars.
Continuing in the wrong direction, both the House and Senate budgets reduce spending for public education relative to the governor’s proposed budget. The Senate does so by failing to include the funding needed for public employee pay raises, while the House budget does not include the governor’s proposed School Building Authority expenditure.
And while administration officials have insisted that the school aid funding formula dictates education expenditures, West Virginia could do plenty to increase funding for public education in a way that helps our students and meets compliance requirements. The state currently spends $1,300 less in per pupil funding on public education than the national average and less than most of our neighboring states. Additionally, the state has several school districts that lack a single social worker or school psychologist, critical support staff as school officials say they are struggling with increasing behavioral issues.
Another area where the state used temporary federal funds to supplant state dollars was in Medicaid. We’ve highlighted in great detail how the increased federal match for Medicaid during the COVID era allowed the state to reduce its base budget spending for Medicaid. That, in part, helped keep the budget flat, which was used to justify permanent income tax cuts. Now, as the federal match for Medicaid has returned to normal, some lawmakers are balking at returning to the state’s pre-pandemic share of Medicaid, even as they acknowledged that reality as recently as last year.
While the governor’s proposed budget fully funds the Medicaid program at current levels, the Senate version come in tens of millions of dollars short of what the agency and governor have said they need to operate in FY 2025. Because Medicaid is a matching program, failing to allocate those state dollars would have an exponential impact in the loss of federal Medicaid funds as a result.
It should be noted that, while the governor’s budget does fully fund Medicaid, it does so by allocating $40.6 million of FY 2024 revenue surplus to the program. Because that $40 million represents an annual cost rather than a one-time cost, it would be far preferable to place it in the base budget.
Blaming ‘uncertainty’ around the ESSER funding as an excuse to underfund the state budget and, with it, the programs and services that West Virginians rely on would be morally and strategically wrong. The uncertainty with our budget is not caused by federal officials or COVID-era spending guidelines, but by the 2023 tax law that created perennial budget uncertainty by instituting annual automatic triggers that could reduce revenues mid-year- even as spending needs emerge. That is likely the real reason we’ve seen both the House and Senate pass budgets over $200 million below the revenue estimate, as we predicted might happen.
Last week, the governor’s chief of staff, Brian Abraham, said that it would be a “misnomer” to say we can’t spend any money because of the possibility of a federal clawback and that “the answer” is to approve the spending the governor proposed. In this case, we are inclined to agree. Rather than facing clawbacks to federal money, the legislature should pass a budget that increases funding for and adequately supports our public education and health care systems—not only to be in compliance with federal requirements but also because it’s the right thing to do for our people and our economy. Lawmakers should also repeal the triggers that will create annual uncertainty like this, while continuing to inhibit important spending needs in public education, child care, and health care.
Read Kelly’s full blog post.
Now that West Virginia families and businesses are filing their 2023 taxes, the state is beginning to see the full impact of tax changes enacted last year. February’s revenue collections were historically weak, coming in 30 percent, or $124 million, below last February’s collections. February’s revenue numbers are the worst in at least a decade when adjusting for inflation.West Virginia’s total revenue gap eight months into the fiscal year now stands at $502 million below this point last fiscal year. While revenue officials in the Justice Administration have tried to explain February’s numbers as a “quirk” or timing issue, in reality, the quirk was actually artificially inflated personal income tax collections in the first half of the year, whereas what we are seeing now is likely to give us a more accurate overall picture of the impact of recent tax changes.
February’s weak revenue numbers were driven by income tax collections, which came in at just $28.9 million–well below the estimate of $91.5 million–as well as 76 percent, or $93.1 million, below last February’s collections of $122.0 million. Even with an estimate far below FY 2023’s income tax collections, this February’s collections came in dramatically low. The paltry $28.9 million in collections marks the worst month in at least a decade, even before adjusting for inflation.
One reason for the income tax’s poor performance in February was businesses taking advantage of the SALT workaround passed in 2023 under SB 151, which allows pass-through entities to prepay income taxes during the first half of the fiscal year and receive credit for those taxes paid during the second half of the fiscal year. This essentially frontloaded or boosted personal income tax collections to the first half of the year that officials noted would be reduced by a similar amount in the second half.
Additionally, the 2023 income tax cuts are having a similar effect on revenues, where some families and businesses withheld too much in the first half of the year, leading to artificially inflated personal income tax collections in July through December that will be reduced by a similar amount as they file their taxes. Even those households and businesses that adjusted their withholdings right away upon passage of the income tax cuts will get a retroactive tax cut for the first quarter of the 2023 calendar year, as the tax cut was made retroactive.
The rest of FY 2024 will likely see the income tax continue to weaken as people continue filing taxes and getting larger-than-usual returns. Income tax collections are already $168.1 million below last year’s collections at this point in the fiscal year, or down 10.5 percent. Revenue officials have said they expect FY 2024 to finish with personal income tax revenues down 10-15 percent compared to last year. This means as more businesses claim their SALT workaround credit, tax filing season begins, and income tax cuts continue to take effect, the worst may still be yet to come for income tax collections.
Beyond that, the personal property tax rebates passed last year do not go into effect until FY 2025. These are expected to cost an additional $200 million in revenue each year, further depressing income tax collections. And these rebates will create a similar phenomenon next year, since they will begin to impact collections in the second half of the fiscal year as people file their tax returns.
All of this is coming before further tax cuts are automatically triggered. A potential additional cut to the income tax for Social Security income could lead to estimated revenue losses of $37 million in FY 2025, $37.7 million in FY 2026, and increasing amounts in subsequent years.
As the 2024 legislative session nears its close, many pressing needs remain unaddressed or up in the air, including pay raises for public employees, finding permanent funding for Medicaid, making our child care system more sustainable, and simply balancing the budget. But none of that will be possible without adequate revenue needed to fund basic needs and important programs.
Read Sean’s full blog post.
Medicaid is the cornerstone of our state’s healthcare economy, and it provides critical health coverage to children, families, and seniors. Because it is a federal-state partnership, every state dollar we spend pulls down almost $3 in federal funds–meaning that failing to fully fund Medicaid at the state level would have an exponential harmful impact on our ability to provide health care to those who need it.
Use our form to urge your lawmakers to support HB 5647, which would fully fund the state’s commitment to Medicaid, and tell them to do so with no harmful strings attached.
The WV House will soon consider SB 614, a “student discipline” bill that will result in an increased number of K-6 students being removed, suspended, and/or expelled from elementary classrooms. The legislation would allow teachers to remove students from the classroom, bar them from riding the bus home, potentially subject them to law enforcement interactions if their parents are unable to pick them up, and exclude them from school until a risk assessment is completed. If passed, the legislation will disproportionately impact students of color, students with disabilities, and poor students and contribute to the school-to-prison pipeline.
Please use this form created by our friends at Mountain State Justice to contact your representatives and urge them to reject SB 614.
Learn more about how SB 614 fails to provide schools with the resources necessary to adequately support students from this recent op-ed by our colleague, Lida Shepherd.
The WVCBP’s Elevating the Medicaid Enrollment Experience (EMEE) Voices Project seeks to collect stories from West Virginians who have struggled to access Medicaid across the state. Being conducted in partnership with West Virginians for Affordable Health Care, EMEE Voices will gather insight to inform which Medicaid barriers are most pertinent to West Virginians, specifically people of color.
Do you have a Medicaid experience to share? We’d appreciate your insight. Just fill out the contact form on this webpage and we’ll reach out to you soon. We look forward to learning from you!
You can watch WVCBP’s health policy analyst Rhonda Rogombé and West Virginians for Affordable Health Care’s Mariah Plante further break down the project and its goals in this FB Live.
