For Immediate Release: April 18, 2023
Contact: Renee Alves, 559-916-5939
Charleston, WV – 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.
Our new report outlines the FY 2024 base budget appropriations, explains how artificially low revenue estimates contributed to manufacturing a revenue “surplus” that was used to justify costly tax cuts, and details how those tax cuts favor the wealthy and will negatively impact everyday West Virginians. The report was authored by WVCBP senior policy analyst, Sean O’Leary.
The biggest piece of legislation affecting the budget is HB 2526, a major personal income tax cut that will cost the state budget hundreds of millions of dollars annually and disproportionately benefit West Virginia’s wealthiest households. The legislation also includes a workaround for the tax cuts rejected by voters via Amendment 2 and contains automatic triggering mechanisms that seek to ultimately eliminate the state’s income tax at the cost of needed budget investments.
“Even before the tax cuts included in HB 2526 go into effect, West Virginia has seen its budget shrinking over the past several years, resulting in increased needs going unmet,” says O’Leary. “The FY 2024 budget relies on one-time surplus funds to pay for ongoing needs, including tax cuts. While that may not pose a budgetary issue this year, once the tax cuts are fully phased in, enacted legislation fully hits the general revenue budget, and temporary surpluses come back to earth, the Legislature will face difficult decisions that include making more budget cuts, raising other taxes, or both.”
Without much debate or a six-year budget plan, lawmakers essentially voted for major tax changes without any informed idea of what effect they will ultimately have on public services in upcoming years. However, we do know several new costs and programs will have to be incorporated into future budgets, all of which are at risk given this year’s tax cuts and future tax cut triggers. Overall, these tax cuts will harm low- and middle-income families by reducing the state’s ability to invest in current programs and services or to make new needed investments.
You can read the full report here.
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