photo by: Steven Allen Adams

Balloons and confetti litter the floor of the Culture Center theater last week following the announcement by Gov. Jim Justice that he would call a special session for an addition 5% personal income tax cut on top of a further trigger.

CHARLESTON — Nearly three weeks before an August deadline to determine whether West Virginia’s tax collections hit a target for personal income tax trigger, Gov. Jim Justice said Thursday the state hit the required benchmarks for a 4% income tax cut next year.

Speaking Thursday during his weekly administration briefing from the State Capitol Building, Justice said state Department of Revenue officials determined that a 4% cut in personal income tax rates will go into effect beginning January 2025.

“I’m really, really proud to announce that we did hit a trigger amount, and it’s not 3%: it’s 4%,” Justice said. “And so you will absolutely be getting a 4% reduction in your income tax.”

The state ended fiscal year 2024 on June 30 with more than $5.7 billion in tax collections for the general revenue fund, providing the state with more than $826 million in surplus tax collections.

House Bill 2526, passed during the 2023 legislative session, cut personal income tax rates by 21.25%, returning approximately $483 million to taxpayers. That number doesn’t include the additional tax cuts in HB 2526, including the tangible personal property tax rebate on motor vehicles and other tax breaks. Also included in that law was a trigger formula for further reducing personal income tax rates every calendar year. HB 2526 limits the maximum cut that can happen in a single calendar year to 10%.

Beginning this August and every August thereafter, the Department of Revenue determines the percentage of the personal income tax cut by comparing general revenue collections in a previous fiscal year minus severance tax collections compared to the base year of fiscal year 2019 and tied to the non-seasonally adjusted consumer price index.

Revenue officials had been predicting between a 1% and 2% income tax cut, but a bump in tax revenue in June increased the possible cut to between 3% and 4%. A 4% personal income tax cut would return approximately $92 million to taxpayers beginning in January.

During a revenue report last week at the Culture Center, Justice said he would call the Legislature into a special session either in August or September to pass a bill cutting personal income tax rates an additional 5%, which would return an additional $115 million to taxpayers in calendar year 2025 if approved by the Legislature and bring to total percentage of personal income tax cuts since 2023 to more than 30%.

“I’m calling everybody back in,” Justice said. “I want them to be able to do another 5%. Another 5% gets us at 30% – in fact, a little above 30% – and so we’re a third of the way almost home and everything. And there is nothing … that’s going to drive population, opportunity, economic growth, on and on and on and on and on to this great state more than getting rid of our personal income tax.”

Legislative leadership, while supporting the goal of phasing out the personal income tax, have been lukewarm when it comes to Justice’s 5% additional tax cut proposal. Justice directed all of his ire Thursday at one lawmaker – Senate Finance Committee Chairman Eric Tarr, R-Putnam.

“If you think in my life that I have time to fool up with Eric Tarr, you’re out of your minds,” Justice said. “All that being said … you’re going to have to make the decision, Legislature, that’s just all there is to it.

“You can either entrust in what our great people in our Revenue Department have done over and over and over, and what I’ve done since I walked in the door, or you can entrust in this man that has led us down path after path after path that has caused all kinds of issues and all kinds of problems,” Justice continued.

“Governor Justice has a serious credibility issue and is hurt because I’ve called his behaviors for what they are,” Tarr said by text message Thursday afternoon in response to Justice’s remarks. “In this year’s State of the State address, he tried to empty the state’s coffers and would have sold the drapes on the way out if the Legislature had let him. Now, he wants to accelerate tax reduction as he tries to reverse the spending control.”

Tarr has been a vocal critic of Justice ever since the governor came out in 2022 against Amendment 2, which gave voters the chance to amend the state Constitution to allow lawmakers to decide to reduce or eliminate six categories of tangible personal property taxes. Republican leaders had planned to phase out those taxes and replace lost revenue to county governments and school systems from the general revenue fund.

“He went on a scare tactic tour of West Virginia — at taxpayer expense — to prevent giving the Legislature the constitutional authority to lower personal property taxes, where West Virginia is terribly out of step,” Tarr said. “He scared county officials around the state with his misinformed sermon about how the Legislature was trying to defund schools, libraries, fire and EMS, and everything else by stealing their property tax revenue.”

“We went through Amendment 2 when really and truly it would’ve destroyed our counties one right after another,” Justice said. “And literally there he was running through the woods, campaigning in every way … Then six weeks before the election, I went out and talked to you, the voters, and literally told you what was on the line. Whether it was your police departments or your fire departments or your schools or whatever, your services in every way absolutely were on the verge of a catastrophe. And we turned it around and absolutely got shot right out of the sky.”

Tarr said it was the last five years of flat budgeting instituted by Senate President Craig Blair, R-Berkeley, and Republican lawmakers that have allowed the state to be able to cut personal tax rates in the first place. Tarr said West Virginia needs to stick with the triggers in place and allow the personal income rates to decrease gradually and responsibly.

“We will decrease taxes, and we already have by more than $1 billion per year thanks to bills that I championed for the Senate,” Tarr said. “What I will not do is let him crash West Virginia’s entire budget and risk its financial future doing it. He can whine, disparage and try to bully me, and attempt to fool the Legislature all he wants. I’m not the one with a credibility issue.”