Blog Posts > Proposed “Tax Cut Tsunami” Would Decimate State Budget
January 20, 2023

Proposed “Tax Cut Tsunami” Would Decimate State Budget

During last week’s State of the State address, Governor Justice proposed a budget-busting personal income tax cut that he promised would be a “tsunami.” Earlier this week, the West Virginia House passed the Governor’s proposal, HB 2526, which will cost a staggering $1.5 billion annually once fully phased in.

WVCBP executive director Kelly Allen released a statement Wednesday following the House’s passage of the bill:

“HB 2526 will decimate the state budget, and with it vital programs that serve all West Virginians. The WV House recklessly passed this legislation with no consideration of how to fill the hole created by eliminating the equivalent of one-third of our state’s budget. Instead of shoring up PEIA, filling public job vacancies, investing in programs that serve children and families, or fixing our state’s infrastructure, both parties decided to enact a huge permanent tax cut for the state’s wealthiest people based on one-time revenues and a short-term energy boom.

“As this legislation moves to the Senate, we will continue to educate West Virginians and lawmakers on the real winners and losers of tax cut proposals like these.”

While the Senate Finance committee has expressed concerns about the exorbitant price tag of HB 2526, they are also considering significant tax cuts for the wealthy and corporations at the cost of much-needed investments in our state and its people.

Contact your legislators today and make sure they know what you want them to prioritize over the next several weeks. The choice could not be more clear: windfall tax cuts for the wealthy and corporations or investments in PEIA, our schools, infrastructure, supports for workers and families, and other critical needs. You can send them a message here.

PEIA Facing $376 Million Budget Cliff, Permanent Funding Solutions Yet to Be Considered by Legislature

As we wrote about late last year, West Virginia’s Public Employees Insurance Agency (PEIA), is projected to face a $376 million shortfall come FY 2027. Early this legislative session, a short-term fixed was proposed, but there has yet to be serious discussion of implementing a permanent funding measure. A recent article featuring our analysis provides further details. Excerpt below:

Earlier this month, when lawmakers were still preparing to come to Charleston for the legislative session, WVU Medicine Wheeling Hospital dropped a bombshell: it would stop taking the state’s public employees’ health insurance. Almost immediately, lawmakers promised action and on the first day of the session, state senators passed a bill to increase the amount the Public Employees Insurance Agency, or PEIA, reimburses hospitals. 

But even the bill’s lead sponsor, Senate Majority Whip Ryan Weld, R-Brooke, acknowledged that the bill was “a short-term fix to what are significant, systemic issues within PEIA.”

More than 200,000 public employees in West Virginia, including all state employees and public school teachers, rely on PEIA for health care for them and their families. Frustrations over the program’s rising premiums and declining quality of care were a driving factor for the nine-day teachers’ strike in 2018. But since then, the agency’s financial crisis has only gotten worse. 

This year, lawmakers say they’re prepared to act to shore up the program, beyond the increased reimbursement rates. But at this early point of the session, one potential PEIA reform that has long been requested by advocates is noticeably absent from early legislative discussions: increased permanent funding. 

A recent analysis from the West Virginia Center on Budget and Policy noted that given the extent of the damage, PEIA premiums would have to rise more than 50% to fully cover the cost of the $376 million shortfall that is expected by 2027. And while the state’s current requirement that insurance costs be paid at an 80/20 split between employers and employees means that the state will have to bear much of the financial costs of those potential changes, experts argue that premium increases would be harmful to public employees currently dealing with inflation and stagnant salaries.

This has fueled the argument that with West Virginia currently experiencing a budget surplus, the state should move to increase state budget appropriations for PEIA using money from the General Fund. That process would require the Legislature to change state statute so that instead of the state covering a maximum 80% of PEIA insurance costs, it would now cover 80% at minimum, preventing employees from experiencing sudden spikes in premiums. A similar provision was included in the PEIA task force recommendations but was not adopted.

Read Mountain State Spotlight’s full article.

Read our blog post detailing the shortfall.

Ohio and Wood Counties: Budget “Surplus” Presentations to Take Place in Coming Weeks

Claims of historic revenue surpluses continue to be touted by public officials to call for personal income tax cuts. And yet, our state is currently experiencing numerous funding crises and suffering the consequences of years of severe underinvestment in critical needs.

Struggling to make sense of West Virginia’s economic landscape? Join us as our team breaks down how artificially underestimated budgets and tax cuts for the wealthy harm our state and its people:

  • Ohio County details: Thursday, January 26 at WV Northern Community College (1704 Market St, Wheeling, WV 26003)
  • Wood County details: Tuesday, January 31 at the Judge Black Annex (317 Market St., Parkersburg, WV 26101) from 5:30-7:30pm

Black Policy Day 2023 Coming Soon!

Black Policy Day is coming to the Capitol on February 15!

Join the WV Black Voter Impact Initiative and their partners for breakfast at the Cultural Center starting at 7:00am, followed by a series of activities and speakers related to the Black policy framework. 

The day will include a breakfast event that reviews the Black Policy Agenda and provides information about current opportunities and resources. The afternoon will include a youth-centered lunch event with accompanying activities. Throughout the day, there will be opportunities to engage in meetings with lawmakers, space for vendors and tabling

opportunities, youth activities, and much more. Some of the events that day will include an option for virtual participation via a live stream.

Learn more and register for the event here.

Share Your Medicaid Experience with Us!

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.

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