In the spring of 2021, Congress passed the American Rescue Plan Act (ARPA) to address the ongoing economic and health impacts of the COVID-19 pandemic. In addition to historic reductions in child poverty through the expanded Child Tax Credit, ARPA’s Fiscal Recovery Funds to states and localities were among the most impactful parts of the legislation. In West Virginia, ARPA Fiscal Recovery Funds totaled $1.3 billion to the state government and $677 million total to cities, municipalities, and counties. These funds are potentially transformative for state and local governments and the residents they serve, with broad allowable uses including replacing lost revenue, responding to the health and economic impacts of the pandemic, providing premium pay for essential workers, and making investments in water, sewer, and broadband infrastructure.
West Virginia and many localities received ARPA Fiscal Recovery Funds in two installments, with the first payment coming in May 2021 – much of it already obligated to services and projects. Earlier this year, in May 2022, the state and localities received the second round of funding.
To date, West Virginia has spent nearly half of its total ARPA Fiscal Recovery Funds. Nearly 20 percent was spent on water and sewer infrastructure and more than 10 percent was spent indirectly on a cash incentive for Nucor Steel. While somewhat difficult to track, the remaining funding spent to date appears to have been replacing funding for eligible state costs, which likely falls under the “replacing lost revenue” bucket of allowable expenses.
That leaves West Virginia with about $689 million remaining and two major allowable uses for ARPA Fiscal Recovery Funds untouched: responding to the health and economic impacts of the pandemic and providing premium pay to essential workers. Both of these areas of potential investment for West Virginia’s remaining ARPA funds could be incredibly impactful and transformational for our state’s residents. While public input would be the best way to identify what West Virginians would like to see the remaining funds spent on, there exists the opportunity to immediately address some long-identified needs for West Virginians.
Lawmakers have already prioritized business investments with the first half of ARPA funds. With our remaining Fiscal Recovery Funds likely to be allocated in the upcoming months, policymakers should focus on the needs of residents in our state. Further, targeting these projects to those communities and populations disproportionately impacted by the pandemic would help ensure more equitable outcomes with these limited resources.
Read Kelly’s full blog post.
This week, Gov. Justice announced that he will call a special session later this month for lawmakers to consider a proposed 10 percent reduction to the state personal income tax. Despite the governor’s claim that this tax cut would “bring prosperity to our state for generations,” income tax cuts inherently benefit the wealthiest households. While the exact details have yet to be revealed, if the cut is structured evenly across all tax rates, the wealthiest 20 percent of our state’s households would receive a staggering 70 percent of the tax cut. Meanwhile, the poorest 20 percent of households would save on average just $7 annually. What’s more, cutting the personal income tax would deprive the state of crucial revenue needed to fund the state programs and services that benefit us all.
Gov. Justice touted the Fiscal Year 2022 revenue surplus in his announcement to argue that West Virginia could afford his proposed tax cut. But it’s critical to note that much of this “surplus” only exists due to the influx of federal pandemic aid and artificially low revenue estimates. In fact, Gov. Justice’s own administration officials have spent this year urging caution given unpredictable economic factors impacting our revenues. If they have more certainty about our fiscal outlook now, they should produce an updated six-year outlook and revise their revenue estimates in order to give the public and legislators more accurate information.
Regardless of the fact that the recent revenue surplus is largely a mere facade of state fiscal strength rather than an accurate representation, using a one-time revenue surplus to justify a permanent tax cut is unsustainable and fiscally irresponsible. Instead of funding a tax reduction that largely benefits West Virginia’s wealthiest, any surplus revenue should be used to address the state’s real and pressing needs, such as the looming PEIA and Medicaid shortfalls.
The WVCBP will be at special session later this month to urge rejection of the governor’s proposal.
Learn more about how cuts to the personal income tax cut disproportionately benefit the wealthy in this blog post.
Learn more about Gov. Justice’s proposed tax cut in this recent article.
The Hope Scholarship, established by the West Virginia Legislature in 2021, provides funding to students leaving West Virginia’s public school system. In the first year alone, over 3,000 scholarships have been awarded, costing the state $13.5 million. This week, a Kanawha Circuit Court Judge ruled the scholarship program unconstitutional. A recent article provides further details. Excerpt below:
Kanawha Circuit Judge Joanna Tabit has concluded that a scholarship program that provides state funds for students leaving the public school system runs afoul of the state Constitution.
That conclusion at the end of a hearing that lasted a little more than an hour led Tabit to determine the Hope Scholarship program is null and void.
“I’m granting preliminary and permanent injunctive relief, enjoining the state from implementing that statute,” Tabit said at the end of the hearing.
There’s a strong likelihood the issue will next go to the state Supreme Court. “We will be appealing,” said Conor Beck, communications project manager for the Institute for Justice, which is supporting parents who want to use the scholarship.
The plaintiffs, parents of students in the public school system, argued that Hope Scholarship violates the state Constitution’s Article XII, Section 1 duty to provide for “for a thorough and efficient system of free schools.” They contend that means the Legislature can’t “exceed this mandate by publicly funding private education outside the system of free schools.”
“A publicly funded system of private education separate from public education is exactly what the Legislature is attempting to establish here— with a separate Board, no academic requirements, and fewer antidiscrimination requirements,” they wrote in the complaint kicking off the legal challenge. “This separate program is unconstitutional.”
The plaintiffs went on to contend that the scholarship provides “a monetary incentive for students to leave the public school system, depleting public school budgets that are significantly based on enrollment.”
Tabit heard from the lawyers on all sides before announcing her conclusions.
“In my view, the Hope Scholarship program provides a financial incentive to students enrolled in public schools to lead the public education system further negatively affecting the public school resources,” the judge said at the hearing’s end.
Read the full article.
Beginning in July 2021, most households with children had received monthly enhanced Child Tax Credit (CTC) payments of $250- 300 per child. However, the enhanced CTC included in the American Rescue Plan Act (ARPA) was temporary and expired at the end of 2021.
The impact on children and families since the expiration of the enhanced CTC has been severe. Between Dec. 2021 and Jan. 2022, there was a staggering 41 percent increase in child poverty nationwide due to the loss of the monthly payments. And as inflation continues to exacerbate family financial hardship, the need to make a robust CTC permanent is as urgent as ever.
Last week, a new proposal to expand the CTC was announced. While we are excited to see bipartisan interest in enhancing the credit and while the proposal does improve some elements of the current law, it also has serious shortcomings – primarily, it does not make the full credit available to the lowest-income families (a notable divergence from the now-expired enhanced CTC that was included in the ARPA). Further, it proposes problematic offsets that would prove detrimental to low-income families.
The costs of insulin continue to rise while income wages remain stagnant, exacerbating pressure on individuals and families to skip or ration insulin doses in order to make ends meet.
You can help us in our fight to urge Congress to take action! If you or your family is being impacted by insulin costs or rationing, please consider completing our survey and aiding us in our advocacy– we appreciate your time and insight.
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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