Blog Posts > W.Va. Officials Look for Answers on Impact of Tax Cuts on Budget
January 25, 2016

W.Va. Officials Look for Answers on Impact of Tax Cuts on Budget

Beckley Register-Herald – State officials, grappling with a budget deficit for the third year in a row and foreseeing at least two more years of lagging revenues, are looking for answers. Depending on which side of the political aisle is promoting the solution, those answers vary.

Gov. Earl Ray Tomblin’s 2017 budget has a mixture of tax cuts and increases to bring the state back to some form of fiscal health. Those include paying off the debt on workers’ compensation early so that cuts can be made to the severance tax which will aid the ailing coal industry. Tomblin also proposed tax increases on tobacco products, including e-cigarettes, and on telecommunications, including data packages. He’s also incorporating two 7.5 percent across-the-board budget cuts from 2015 and 2016 and a midyear 4 percent cut from this fiscal year.

Those measures have to pass muster with the Republican-led Legislature, which has not been big on tax increases, even for tobacco products.

West Virginia’s budget relies on personal income tax, sales tax, business and occupation tax and, up until last fall, severance taxes on extractive industries. As coal production slid and natural gas prices fell, severance taxes took an unforeseen nose dive in October. Coal production has since leveled some, but low energy prices have kept state revenues from natural gas extraction depressed.

The West Virginia Center on Budget and Policy analyzes each state budget for its effect on people. Tax cuts, they say, aren’t always the answer, and last week, they brought in reinforcements from North Carolina to prove the point.

Alexandra Sirota from the North Carolina Budget and Tax Center said public investments had “built the foundation for a strong North Carolina,” but leaders have recently put the state on a “damaging path” of tax cuts.

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