Can Tax Plan Make It Through Legislature?

Last Thursday was the 30-day mark of the 60-day legislative session for 2021, so it’s all downhill from here.

Of the 1,767 bills that have been introduced this session, 65 bills have passed the House of Delegates, 93 bills have passed the state Senate, 21 bills have completed legislation, and six bills have been signed by Gov. Jim Justice.

Tomorrow is the final day to introduce bills and joint resolutions in the House (that doesn’t prohibit originating bills from committees, supplemental appropriations bills, and regular resolutions or concurrent resolutions).

Much of the heavy-lift bills that garnered much debate from the Democratic minority are mostly through the process. The Senate is still working through some of those bills, such as occupational licensing changes and the education savings account bill.

Still, that leaves 27 days for some of the more controversial bills that have bipartisan opposition from being pushed through. I’m already seeing some state college and university leaders wave the red flag on campus carry legislation (allowing students to be armed on campus).

Campus carry is one of those bills that even sends the Republican majority in the House fighting amongst each other. I’m still convinced the last fight on campus carry pushed former House Judiciary Committee Chairman John Shott, R-Mercer, into retirement after his disrespectful treatment by several fellow Republicans during the debate on campus carry.

I only raise campus carry as an example of the direction lawmakers can go in with free time on their hands. Of course, they won’t have a ton of free time with Gov. Jim Justice’s tax plan sitting in finance committees. But that’s another story.

Nothing is ever dead during the legislative session, but I think it is safe to say that Justice’s tax plan is at least in the ICU.

The first blow was the provision in President Joe Biden’s $1.9 trillion COVID-19 relief package that prohibits the use of the federal dollars to offset legislated reductions in state taxes.

Justice has since tried to deny saying he wanted to use the remaining CARES Act funds the state still has in its possession (more than $600 million of the $1.25 billion) to put into a “bucket” to cushion a transition away from the personal income tax.

Justice is very much on the record, in his State of the State address for crying out loud, saying he wanted to do that. His own revenue people admitted they hoped the Biden administration would forgive the state’s interest-free loan to keep the unemployment trust fund in the black. That would have allowed the state to replenish the fund with some of that $600 million and use the rest for the bucket.

I can’t imagine the Biden administration will do that, and even then I don’t think U.S. Treasury guidance will change. Add to that the tax cut prohibition in the new Biden package, that will make attempting a personal income tax cut combined with tax increases in other areas a hard ask.

The second blow came from the West Virginia Business and Industry Council letter to lawmakers asking them to slow down on tax reform right now, considering that Justice’s personal income tax cut puts more pressure on small businesses.

BIC has almost always supported Justice during his first term and endorsed him for governor in 2020. BIC has also endorsed and donated to several Republican lawmakers (and possibly some Democrats, though none spring to mind). The fact that BIC is asking for the brakes to be pumped is huge.

The BIC letter prompted Justice to hold a virtual town hall with seven hours of notice Thursday evening. During that town hall, Justice hit back at BIC and other lobbyists who are trying to sway lawmakers to either oppose Justice’s plan or make changes to the plan.

Frankly, Justice’s confrontational tone during that town hall isn’t likely to gain him much support. In fact, it’s likely to cause business groups to double down, smelling blood in the water. The fact that Justice ran to YouTube hours after the BIC letter went public is a sign that he knows his plan is in trouble.

I expect you’ll see the Senate Republicans move on Justice’s bill and send the Senate version to the House. With 34 members and 23 Republicans, it will be an easier lift there. It’s the House side that will cause the bill to slow down. The more members keep finding out about the bill’s effects on businesses, the more votes I think you’ll see drop off.

Remember Justice’s plan to fill the nearly $500 million budget hole back in 2017 that had Senate support but crashed and burned in the final days of the legislative session in the House? You could very well see a repeat of that with this tax plan.

The governor and the Legislature have four weeks to figure out these issues and come to an agreement, plus pass the budget for the next fiscal year.


Today's breaking news and more in your inbox

I'm interested in (please check all that apply)


Starting at $4.39/week.

Subscribe Today