Blog Posts > Two Personal Income Tax Cuts Now on the Table, Both Disproportionately Benefit the Wealthy and Create Gaping Budget Holes
March 26, 2021

Two Personal Income Tax Cuts Now on the Table, Both Disproportionately Benefit the Wealthy and Create Gaping Budget Holes

Two plans to eliminate West Virginia’s state income tax are now under consideration, one proposed by Governor Justice and the other by the West Virginia House of Delegates. The two proposals differ significantly, but they both disproportionately benefit the wealthiest West Virginians and create vast holes in the state budget, necessitating massive, painful cuts to critical public services.

The biggest piece of Governor Justice’s proposal is an immediate 60 percent reduction in the state’s personal income tax rates. To offset a portion of that lost revenue, it looks to increase the state sales tax by nearly 2 percent, which would give West Virginia the highest sales tax in the nation. Sales taxes are regressive, meaning that they fall more heavily on low- and middle-income individuals than they do on high-income individuals. And even this sales tax increase combined with the other tax increases proposed in the plan would leave a $185 million hole in the state budget in the next fiscal year, which translates to unavoidable cuts to public services.

You can read Sean’s recent blog post on Governor Justice’s proposed tax plan and its impacts here.

In contrast to the governor’s plan, the House plan (HB 3300) proposes immediately reducing the state’s income tax brackets starting January 1, 2022 and then requiring a $150 million reduction in total income tax revenue every year thereafter until the income tax is fully eliminated. Another important way the House plan differs from the governor’s is that it includes no offsetting revenue increases, meaning the state is simply left with massive budget deficits that ensure even more devastating cuts to public services than the governor’s plan would require.

You can find Sean’s complete analysis of HB 3300 in our newest blog post or get up to speed by viewing our overview of the bill and its impacts in our recent Facebook Live.

One notable similarity between the two plans is that they both benefit the wealthiest West Virginians at the expense of the state’s low- and middle-income residents. Articles with further details comparing the two proposals can be found here and here.

WVCBP has long been sounding the alarm that eliminating the income tax would devastate the state budget. Last week, we released an issue brief that explores the facade of West Virginia’s current budget stability, the state’s concerning economic outlook, and how proposals to slash the state income tax would make a fraught budget situation even worse. Key findings are as follows:

  • FY 2022 base budget appropriations are $57 million below the final FY 2021 budget.
  • The FY 2020 budget was balanced with $300 million in one-time budget maneuvers, including using $150 million in Medicaid reserve funds.
  • Medicaid reserve funds are also being used to balance the FY 2021 and FY 2022 budgets. By FY 2025 the reserve funds will be depleted, and by FY 2026 Medicaid will be facing a $153 million shortfall.
  • An increase in the federal match for Medicaid under the CARES Act will save the state $300 million in calendar year 2022. Overall, West Virginia citizens, businesses, and state and local governments have received over $7 billion from the CARES Act, which has boosted the economy and aided the budget.
  • The governor’s proposed plan to cut the income tax and raise sales and other taxes would lead to an immediate $185 million loss in revenue, while raising taxes on the average low- and middle-income household.

You can read the full issue brief here.

We welcome you to join us and send a letter urging legislators to prioritize investing in West Virginia’s families and communities over providing a tax cut to the state’s wealthiest here.

Bipartisan Medicaid Bill Introduced in WV Legislature Could Reduce Churn and Expand Insured Population

Since its inception in 1965, Medicaid has been one of the most impactful anti-poverty public health initiatives in the United States. Medicaid provides low-income Americans with free or low-cost health insurance, allowing them to receive treatment that may otherwise be inaccessible. The program has expanded significantly since its origin to include more people; today, it serves over 77 million people nationally. As of January 2021, that figure includes nearly 570,000 West Virginians or about one-third of the state population. And of those 570,000 people, 189,000 enrolled between 2013 and 2018 due to the Medicaid expansion permitted by the Affordable Care Act (ACA). 

Despite Medicaid’s significant accomplishments, many people across the country still do not have access to health care. While legislators have sought several ways of bridging the gap, gridlock at the federal level has put states at the forefront of long-term policy changes that will aid their citizens. One such policy that has bipartisan support in West Virginia is a Medicaid buy-in program. Essentially, a buy-in program allows people to pay to enroll in Medicaid or a Medicaid-like program, utilizing the networks, purchasing power, and structure of the state’s existing program. 

HB 3001 seeks to expand West Virginia’s current Medicaid buy-in program. It would allow West Virginians up to 200 percent of the FPL to receive subsidies for the program and would include a range of essential services, from preventive and wellness to emergency, with a small monthly premium.

Enacting a broader Medicaid buy-in program has tremendous implications for public health and wellness across the state. Adding uninsured West Virginians between 138 and 200 percent of the federal poverty level to the state Medicaid program could reach a potential 26,000 people. Statewide, this program would also mitigate the persistent racial coverage gap, in which Black West Virginians are less likely than the overall population to have health insurance. Currently, 10 percent of Black West Virginians do not have health insurance, compared to about eight percent of their white counterparts.

West Virginia showed its dedication to public health when it became one of the first states to expand Medicaid. Now the state has a unique opportunity to lead the nation by broadening the current Medicaid buy-in program. By utilizing the existing infrastructure, lawmakers can ensure that West Virginians have access to health care, particularly Black residents. Its low cost to both enrollees and the state makes it an ideal way for lawmakers of both parties to make affordable health care a reality in West Virginia. 

Read Rhonda’s full blog post.

Saving Lives and Saving Money: The Case for Harm Reduction in Kanawha County, WV

West Virginia has long been at the forefront of the overdose epidemic in the US. Since 2010, its death rate per 100,000 by overdose of any type of drug has led the nation. Our new report both shows the heavy economic toll this crisis has on West Virginia as a whole and shines a spotlight on Kanawha County, the county with the highest number of overdose deaths in the state.

The report, authored by economist Dr. Jill Kriesky, reveals that the overdose crisis cost West Virginia $11.3 billion & Kanawha County $1.7 billion in 2019 alone. These staggering amounts represent nearly 15 percent of the state & county gross domestic products, respectively.

A major portion of the study examines the dollars spent on treating and addressing the diverse array of harms that stem from West Virginia’s current addiction crisis. These include Hepatitis B & C, HIV, endocarditis, neonatal abstinence syndrome, and the foster care crisis.

The report concludes with a brief overview of harm reduction programs designed to address these enormous damages and what is known about their cost-effectiveness. A key staple of harm reduction efforts, syringe services programs, are cited as reducing HIV & Hepatitis C by nearly 50 percent.

You can find the full report here, read a summary of its findings in a recent article here, and listen to an interview with the report author here.

Despite the fact that harm reduction efforts are supported by the U.S. Centers for Disease Control and Prevention (CDC), SB 334 — a bill that would severely restrict harm reduction programs statewide — has passed out of the full Senate and will now be considered by the House Health and Human Resources committee and the House Judiciary committee. If the bill is adopted, it will have not only a severe moral cost, but a dramatic financial cost as well, as suggested by our new report.

Read the latest on SB 334 from the media here.

Harm reduction is also facing attacks at the city-level. Charleston City Council will likely vote on a new ordinance that would make Solution Oriented Addiction Response’s (SOAR) currently legal harm reduction program a misdemeanor with hefty fines. If this ordinance were to pass, it would also make Charleston the first West Virginia city to outlaw an active harm reduction program.

If you are a Charleston resident, we invite you to join us in contacting your City Council Member and voicing your support for the full authorization of SOAR’s work.

Not sure who your Council Member is? There’s a handy map here and a list of contact information here.

We at the WVCBP wholeheartedly believe that needs-based harm reduction programs make our communities healthier, safer, and kinder. We would sincerely appreciate if you contacted your Council Member and expressed support for SOAR’s work.

Hope Scholarship Would Be Nation’s Broadest, Likely Most Costly ESA Program Despite Lack of Evidence of Equitable Education Outcomes

Last week, HB 2013 (the Hope Scholarship Program) passed out of both the full Senate and the full House. The bill now awaits signature from Governor Jim Justice. WVCBP executive director Kelly Allen’s statement, released last Wednesday, is as follows:

“Today the WV Senate passed HB 2013, the Hope Scholarship program, which will be the broadest and likely most costly Education Savings Account program in the country. If signed into law, the program will divert hundreds of millions of dollars of education funding to families who have already made the choice to send their children to private school or homeschool — and away from our public schools, where the vast majority of our state’s students will learn with fewer resources.

“Instead of investing in all our state’s students by adequately funding our public schools, this redirects resources to families who already have school choice. We urge Governor Justice to veto this fiscally irresponsible legislation.”

West Virginia is well below the national average in overall per-pupil education spending, and this bill will only result in fewer resources for the vast majority of students who will remain in public schools.

Ignoring the impacts of socioeconomic factors in educational outcomes ensures that education reform will fail. West Virginia is currently one of only eight states that does not consider poverty when allocating funding.

Fully funding our public schools ensures opportunity for all, not a few.

We invite you to join us and contact Gov. Justice urging him to veto HB 2013. You can send him a quick letter here. It will only take a minute of your time.

For further details on the costs of the Hope Scholarship and why most West Virginia families do not benefit from ESAs, read our blog post, check out our ESA Fast Facts sheet, or watch our explainer video.

HB 2257 Won’t Improve Reentry in West Virginia

HB 2257, which passed out of the full House and will now be considered in the Senate Judiciary committee, seeks to create a new form of extended supervision for people convicted of certain drug crimes for up to an extra 10 years, beginning after their normal parole or probation supervision ends. Such legislation would have a significant human and financial toll.

In FY 2019, almost 25 percent of the people who were sentenced to prison in West Virginia were arrested for parole and probation technical violations, costing the state millions. Undoubtedly, the extended supervision created by HB 2257 would lead to more parole and probation revocations, and would also serve to further burden people facing the already daunting task of reentry.

This legislation would be a step backward at a time when other states are making real progress toward criminal justice reform. Not a single other state has a provision that allows for 10 additional years of supervision on top of parole for drug crimes.

If the Legislature is serious about reducing recidivism, they should prioritize devoting more resources to reentry in West Virginia, including short- and medium-term housing, comprehensive health and drug treatment, and job training, rather than spending on increased supervision.

More on the repercussions of this bill in Quenton’s full blog post.

For some additional insight on other pieces of legislation being considered this session that would impact re-entry, check out this article and the West Virginia Criminal Law Reform Coalition’s newest blog post.

HB 2611 Seeks to Address Long-Recognized Racial Health Disparities, but Bill Remains Stagnant at Legislature

It has become indisputable that COVID-19 disproportionately harmed West Virginia’s Black communities. And even prior to the pandemic, the state was home to persistent racial health disparities. As in many previous years, a bill has been introduced this legislative session to begin addressing these disparities, but it has yet to be prioritized. A new Mountain State Spotlight article provides further details. Excerpt below:

But despite the lessons learned during COVID-19, efforts in the West Virginia Legislature to establish a permanent Minority Health Advisory Team to address the state’s racial health disparities have stalled. 

Supporters of such efforts say that addressing racial health disparities requires bringing together experts in the medical field, but also from other sectors in the community in order to address broader issues — like income, education and housing — that impact health. Just convening those groups with a set purpose and goal, supporters say, is a first step toward a more equitable West Virginia; a step that has been discussed beforebut never actually taken.

“This bill comes up year after year and goes nowhere,” said Delegate Danielle Walker, D-Monongalia, who is co-sponsoring House Bill 2611. “If it had been passed multiple years ago, then [the state] could have been prepared and prevented some of the unnecessary suffering…”

Nearly every year that the bill has been introduced and assigned to a committee, the chair hasn’t ever put it on a committee agenda. The bill dies without discussion or a vote, as though the legislation hadn’t ever been proposed in the first place.

“There are people in this state who don’t want us to exist,” said Walker, who is the only Black woman in the West Virginia Legislature. “But we do. And we want equity.”

Read the full article here.

WV Criminal Law Reform Coalition – “Philly DA” Virtual Screening & Conversation

Join the West Virginia Criminal Law Coalition and our special guest panel next Tuesday, March 30 at 6:30pm as we watch and discuss the new docuseries “Philly DA” ahead of its premiere.

“Philly DA” is a groundbreaking documentary series embedded inside the long-shot election and tumultuous first term of Larry Krasner, Philadelphia’s unapologetic District Attorney, and his experiment to upend the criminal justice system from the inside out.

You can view the trailer here.

The virtual event is being offered free of charge and is open to all. Find the Facebook event here and further details and registration here.

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WVCBP Now Accepting Applicants for 2021 Virtual Summer Policy Institute

WVCBP’s Summer Policy Institute (SPI) is an annual event for college students and young people interested in bettering West Virginia through policy change. SPI brings together highly qualified traditional and non-traditional college students and young people to build policy knowledge, leadership skills, and networks. 

Attendees participate in interactive sessions where they learn the basics of data, policy, and state government and build their organizing and advocacy skills. Throughout the convening, attendees work in small groups to identify and develop policy proposals to shape the future they want to see in West Virginia, culminating in team “policy pitches” to state legislators and policy professionals. Many SPI attendees have gone on to continue advocating for their policy idea and to hold internships with West Virginia non-profits and in state government.

Applications for SPI are being considered through April 30. Further details and link to apply here.

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