Justice Ups the Ante on PEIA to $150 Million in State of the State Address

CHARLESTON — Gov. Jim Justice laid out his legislative priorities and proposed a budget that projects additional revenue surpluses in his third State of the State address Wednesday night.

Those priorities include a larger-than-anticipated contribution to state employees’ health insurance program.

“I hope tonight I’ll have a lot of good news for you,” Justice said. “Tonight, I’m proud to be sitting and talking to you and not at a podium lecturing to you.”

It’s a vastly different situation for the governor who is more than halfway through his first term. When Justice gave his first State of the State address, he proposed tax increases to fill a nearly $450 million hole in the fiscal year 2018 budget.

“When I got here, we had multiple years of cut budgets,” Justice said. “We haven’t had any cut budgets recently and we’re not going to have one today, either. Today we have things that are so good.”

The proposed general revenue budget for fiscal year 2020, which will start July 1, comes in at $4.675 billion. That’s a 1.73 percent increase over the fiscal 2019 budget Justice proposed in January 2018, which came in at $4.439 billion.

Public education makes up 43.4 percent of proposed fiscal 2020 expenditures, followed by health and human resources at 28.1 percent.

The Department of Revenue estimates that revenue growth will go up by 2.05 percent. So far in the first six months of this fiscal year, tax revenue came in at $185.9 million above estimates, with lottery revenues year-to-date also up 16 percent above estimates. The state ended the fiscal year at the end of June with a surplus of $36.1 million. Justice said these are record-breaking numbers that give him and the Legislature some latitude to make improvements for West Virginians.

“Today, we have an all-time record,” Justice said. “That’s pretty damn big to me, the biggest in the state’s history.”

Improvements include a 5 percent pay raise for teachers, school service personnel and public workers. Under the plan, teachers would get a pay raise of $2,120 with $1,050 for school service personnel and $2,370 for other state employees, combined with the second year of a three-year increase for Division of Corrections employees. This is on top of the 5 percent pay raise these state employee classifications received last year after a nine-day strike by teachers.

Justice also announced the intention to put $150 million in the state’s Public Employees Insurance Agency for long-term stabilization, up from the $100 million he originally proposed in October.

“Putting money into PEIA is a giant first step,” Justice said. “We can do that, and that’s exactly what we’re going to do.”

Other education initiatives include increased pay for teachers in math, $5 million for expansion of the Communities in Schools program, and encouraging the Department of Education to combat absenteeism among students and teachers.

On the topic of commerce, Justice said the $83 billion China Energy deal to invest in natural gas in West Virginia is still on, with talks between the state and company ongoing. Justice is putting an additional $14 million in the Tourism Division to continue promotion efforts, plus bonds have been sold to renovate state parks.

On the subject of roads, Justice said the Department of Transportation plans to allocate additional money to fix secondary roads in the state. That will involve shifting road bonding from larger projects. Turning to the RISE West Virginia flood relief program that came to a halt between February and June, Justice hopes to take some of the nearly $150 million in U.S. Housing and Urban Development money for economic development projects and tearing down dilapidated homes around the state.

Justice also joined lawmakers in proposing exempting the remainder of Social Security beneficiaries from having their income taxed by the state. In West Virginia, 78 percent of all Social Security beneficiaries already don’t pay state and federal taxes based on income. According to revenue officials, 10 percent of all income generated in West Virginia comes from Social Security beneficiaries, which is nearly twice the national average.

Exempting the remaining 22 percent of Social Security beneficiaries from having their income taxed would cost the state only $50 million. The states surrounding West Virginia already exempt all Social Security beneficiaries from being taxed, as do 22 other states.

Justice also called for constitutional amendment to eliminate the businesses and inventory tax, which will take a two-thirds vote of both the House and Senate before going on the ballot for voters to approve in 2020.

To address the drug epidemic, Justice proposed “JIM’S Dream” — Jobs In Making You Succeed. The program is an effort to help with drug rehabilitation and to train recovering addicts for the state’s job market. The plan would involve $5 million for drug prevention, $10 million for treatment programs and $10 million for staff and equipment maintenance at vocational-technical schools. If the recovering addict completes the program, they would be able to take the certificate and get their misdemeanor record expunged.

Justice said the program would be paid for from the budget surpluses.

In the Democratic legislative caucus response to Justice’s State of the State address, Senate Minority Leader Roman Prezioso, D-Marion, and House Minority Leader Tim Miley, D-Harrison, said they agreed with several of the proposals from the governor, including exempting Social Security from taxation and the state employee pay raises. But other proposals, such as eliminating the business and inventory tax and the JIM’S Dream program left them wondering how the state pays for them.

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