Gov. Jim Justice put West Virginia legislators and even the two candidates for governor in a pickle when he challenged lawmakers last week to give him an additional 5% cut in personal income tax rates on top of a likely smaller income tax cut trigger.

I’ve attended every end-of-fiscal-year tax revenue report given by Justice. At one of those events, they handed out Hawaiian leis following revenue numbers for the governor’s second year in office. That was the year following the big budget hole, the fight with the Legislature and the silver platter of cow dung.

Since then, the state has seen more than $3.7 billion in surplus tax collections. You can certainly argue about the ways revenue estimates are crafted and tweaked to get to that, but a surplus is a surplus, at least on paper. And according to the Governor’s Office, the state has returned $1 billion to taxpayers during his seven-and-a-half years by cutting various taxes.

The last nearly four years of Justice’s second and final term have been filled with efforts to phase out the personal income tax. And while both branches have agreed on the need to lower taxes, they have not always agreed on the best way to do so.

An effort by Justice and state Senate Republicans in 2021 to cut personal income tax rates by 50% – paid for by raising other taxes and getting rid of sales tax loopholes for certain services – went down in flames when the House of Delegates voted it down. House Republicans preferred a more reasonable phase-out of the personal income tax.

The next year, the governor’s relationship with Senate Republicans soured after he actively campaigned against Amendment 2, which went down in flames in November 2022. Had it been approved by voters, it would have given the Legislature the authority to lower or eliminate six categories of tangible personal property tax. The Senate had a plan to get rid of those taxes and reimburse county governments and school systems for the lost revenue.

Oddly enough, Justice ended up supporting (and trying to take credit for) a personal income tax phase-out plan that then-House Finance Committee Chairman Eric Householder, R-Berkeley, had proposed in 2021. Going into the 2023 legislative session, the governor, Senate and House all went back and forth on a personal income tax cut plan. But ultimately, they came to an agreement. Lawmakers and Justice agreed to cut personal income tax rates by 21.25% retroactive to the beginning of January 2023. According to Department of Revenue numbers, more than $423.7 million stayed in the pockets of taxpayers between fiscal year 2023 and fiscal year 2024 since that rate went into effect.

That law — House Bill 2526 — also included a formula for future cuts in personal income tax rates. Beginning this August and every August thereafter, revenue officials will use a formula to determine whether personal income tax rates will be cut between 0 and 10% beginning in the next calendar year. Tax officials will compare general revenue collections in the previous fiscal year — minus severance tax collections — and compare that to the base year of fiscal year 2019 and the current inflation rate.

State revenue officials were predicting for the last several months that the tax cut trigger would be somewhere between 1% and 2%. But tax collections before the end of fiscal year 2024 on June 30 have now moved the trigger estimate to between 3% and 4%. According to Department of Revenue Secretary Larry Pack, every 1% cut in the personal income tax returns approximately $23 million back to taxpayers. So, a 4% cut in personal income tax rates due to the trigger would return $92 million to taxpayers.

But Justice wants lawmakers to consider a 5% personal income tax cut on top of the trigger in a special session either in August or September. That alone would return $115 million to taxpayers. Combined with the possible 4% trigger, that would return $207 million to taxpayers.

West Virginia ended the fiscal year last week with $5.7 billion in tax collections and $826.6 million in surplus tax collections. Of that $5.7 billion, personal income tax collections were $2.2 billion, which was 11.8% above the revenue estimate. Personal income tax collections were nearly 40% of the total $5.7 billion in general revenue fund tax collections. And surplus personal income tax collections made up nearly 29% of the $826 million surplus.

The lawmakers I talked to last week were caught off guard by Justice’s call for another 5% cut. Some were visibly uncomfortable being on stage with Justice at the Culture Center cutting a tax cut ribbon and pulling a switch to drop balloons and shoot confetti. Some didn’t even want to talk to me after the event, still trying to absorb the announcement.

Officials in the Governor’s Office told me Justice proposed the 5% personal income tax cut because if the trigger hits 4% combined with the 21.25 cut in 2023, that would mean Justice can say he cut personal income tax rates by more than 30% by the time he leaves office in January 2025. But even one of those officials admitted they will have to work with lawmakers to come up with a plan everyone can support.

The question for lawmakers isn’t whether the state can afford a possible additional 10% cut in personal income tax rates in the short term. The question is whether lawmakers and a future governor can maintain the delicate balance in the natural growth in state tax revenue and future expenses if they cut personal income taxes too quickly.

But the current pickle for lawmakers — as well as Republican candidate for governor Patrick Morrisey and Democratic candidate for governor Steve Williams — is who in an election year is going to flat out say no to cutting taxes? Both Morrisey and Williams told WV MetroNews’ Brad McElhinny last week they support phasing out the income tax in a responsible way. Most lawmakers are echoing a similar line.

Privately, Republican lawmakers are skeptical an August special session will even be called, because at least right now there is no appetite for another 5% cut. They’re happy with the trigger mechanism to reduce personal income tax rates gradually. Even with $400 million squirreled away in case future income tax cuts send general revenue fund collections sideways, they don’t see a path for taking a bigger chunk out of income tax rates.