Hold the Line On Tax Hikes
West Virginia legislators talked this winter about increasing some taxes to balance the state budget, but abandoned the idea. That was the right thing to do, as a one-two punch of reports on the economy makes clear.
Last year, Mountain State residents suffered through the slowest personal income growth in the nation, the U.S. Bureau of Economic Analysis reported Tuesday. Personal incomes here grew by only 1.5 percent in 2013, compared to a 2.6 percent rate nationally.
Also Tuesday, state officials revealed that unemployment increased in 52 of West Virginia’s 55 counties last month. Wetzel County had the highest rate in the state, at 13.2 percent.
Meanwhile, revenue flowing into state coffers – much of it related to business activity – has been below predictions throughout the current fiscal year.
All that paints a disturbing picture of the inability of West Virginians – individuals, families and businesses alike – to pay higher taxes. In fact, by diverting income from personal and business uses to government, higher taxes make it more difficult to recover.
Gov. Earl Ray Tomblin and legislators did the right thing this year, by enacting a budget that includes no tax increases. Still, government spending will increase due to factors beyond our control, such as higher health care costs. Also boosting the budget will be increased spending on items such as pay raises for teachers and other state employees.
Only by agreeing to take between $80 million and $100 million out of the state’s emergency Rainy Day fund were Tomblin and lawmakers able to balance the budget for the upcoming fiscal year.
There is no reason to believe the situation will improve during the next couple of years. At this time next year and the year after that, the governor and legislators will be debating how to balance revenue with spending.
So, while they avoided tax increases this winter, pressure to bow to them will be even greater next year. Tomblin and legislators should resolve now, with evidence of the peril the state’s economy faces in front of them, to hold the line on taxes for the foreseeable future.