Overview
During the 2023 West Virginia legislative session, lawmakers had the opportunity to use available revenues to address longstanding needs like ensuring PEIA and Medicaid solvency, filling crisis-level staffing vacancies across state agencies, or increasing investments in neglected areas like higher education and child care. But instead, the FY 2024 budget debate was dominated by creating space for tax cuts that overwhelmingly benefit the wealthy and hamstring future budgets for years to come. The FY 2024 budget once again lacked a six-year plan, leaving the impact of the tax cuts on future budgets unclear, and questions about potential future budget deficits unanswered.
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Key Findings
- The final FY 2024 budget is $282.8 million above the final enrolled FY 2023 budget, with most of the increase coming from a $2,300 flat public employee pay raise.
- Once again, artificially low revenue estimates were used to manufacture large surpluses to make tax cuts appear more affordable. This resulted in temporary surplus funds that will no longer be available once tax cuts are enacted going toward funding ongoing needs as the base budget shrunk.
- Expensive tax cuts enacted by the Legislature will hurt the state over time, costing nearly $818 million in FY 2025 with triggers that seek to eventually eliminate the personal income tax entirely, at an annual cost of over $2 billion, or about 40 percent of the state’s general revenue budget. The personal income tax is the state’s only progressive tax and its single largest source of general revenue.
- The state budget was already shrinking before the 2023 tax cuts, leaving needs unmet and future budgets vulnerable to more painful cuts. The final FY 2024 general revenue budget is $591 million less than the FY 2019 budget after adjusting for inflation.
