West Virginia governor proposes $5.3 billion budget with tax cuts
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West Virginia Gov. Jim Justice proposed a $5.3 billion fiscal 2025 budget that contains tax cuts for senior citizens and families with children.
Justice, who unveiled the
“We’re continuing to make West Virginia a more affordable place to live, raise a family and retire, and these proposals demonstrate my commitment to putting real money back in people’s wallets, helping families raise their kids, seniors stay in their homes and everyone breathe a little easier,” Justice said.
Office of the Governor
The Social Security benefit exemption would remove the current income cap on excluding Social Security income from taxation. It’s estimated to help more than 50,000 senior households and would bring West Virginia in line with 40 other states that don’t tax Social Security.
The senior citizen property tax credit would benefit seniors with homestead property taxes and federal adjusted gross income below 200% of the federal poverty guideline, increasing the maximum credit amount by 50% and expanding eligibility by an additional 50% of the federal poverty guideline.
The child and dependent care tax credit would affect more than 16,000 West Virginia families by creating a state tax credit equal to 50% of the allowable federal child and dependent care credit.
All changes would be effective retroactively to the start of the year. The state Legislature is now considering the governor’s proposed budget, which is up from the $4.9 fiscal 2024 budget.
“We need to stand behind our seniors. Absolutely, the very people that brung us to the dance. The very people that in oftentimes we run away from and we think ‘oh they’ll be okay.’ No, they won’t be okay,” he said.
The governor has also proposed nearly $300 million in new spending.
He wants “$20 million to our senior centers. $15 million to our state parks. $5 million to absolutely never forget our firemen, our EMSs and their agencies.”
Justice also wants a 5% across-the-board pay raise to teachers and service personnel as well as all government workers, $200 million for state School Building Authority projects and $5 million for public charter school funding.
He proposed a bill to give all military veterans the right to pay in-state tuition in West Virginia, and $5 million “to supercharge the Ascend program in West Virginia.”
The
Additional requests include $53 million for the two state psychiatric hospitals, $10 million for the emergency food fund and $30 million for the state’s nursing expansion program.
Justice also proposed spending $50 million to support the construction of new single- and multi-family housing units across the state.
“West Virginia is booming, and with new companies and a thriving tourism industry, we need homes for our growing workforce,” he said.
The state is seeing economic growth in the state with the arrival of companies like Berkshire Hathaway and Nucor. This along with the creation of the New River Gorge National Park and Preserve are fueling demand for new homes.
“Housing is a critical component of economic development,” Erica Boggess, executive director of the state Housing Development Fund, said in a statement. “The people who come to work for companies like LG Electronics or Nucor or for our new national park need suitable, affordable homes.”
The West Virginia Housing Development Fund was established to increase the supply of residential housing for those with low to moderate incomes and to provide construction and permanent mortgage financing to public and private housing investors.
West Virginia’s general revenue collections for December came in at $553.2 million, $120.1 million above the official estimate.
Collections for fiscal 2024 of more than $2.766 billion are $406.4 million ahead of the cumulative estimate. December was the sixth month of fiscal 2024.
Even after a 21.25% personal income tax cut, the largest cut in state history, the cumulative surplus was led by a strong performance from personal income taxes and corporation net income taxes.
“Surpassing estimates by over $400 million halfway through the fiscal year is a testament to the resilience of our state’s economy,” Justice said. “We also continue to prove cutting our income tax was the correct decision, and I am proud that we continue to establish a bright future for West Virginia.”
December personal income tax collections of $236.8 million were $70.7 million above estimate while cumulative personal income tax collections of over $1.174 billion were $201.4 million above estimate and 0.3% below the previous year despite the tax rate cut.
Corporation net income tax collections of $56.5 million in December were $16.4 million above estimate while Year-to-date collections of $218.3 million were $109.1 million above estimate and 13% ahead of last year.
Consumer sales tax collections totaled $168.4 million, up 4.5% from the prior year while year-to-date collections of $870.1 million were $21.0 million above estimate and 4.5% ahead of last year.
December severance tax collections of $35.8 million were $11.5 million above estimate as cumulative collections totaled more than $112.1 million. Year-to-date interest income collections of more than $114.3 million were $91.0 million above the official estimate and about 194% ahead of last year.
The state’s unemployment rate rose 0.2 percentage points to 4.2% in November, according to the U.S. Labor Department, 0.5 percentage points higher than the national rate. The unemployment rate peaked during the COVID-19 pandemic at 15.7% in April 2020 and is now 11.5 percentage points off the low.
West Virginia’s general obligation bonds are rated Aa2 by Moody’s Investors Service, AA-minus by S&P Global Ratings and AA by Fitch Ratings.
West Virginia ranked 49th in bond volume last year as issuers in the state sold $1.6 billion of debt, up 303.5% from $384 million and a rank of 50 in 2022.
This was Justice’s last State of the State address. A Democrat-turned-Republican, he took office in 2017 and is term limited out at the end of the year. He is running for the U.S. Senate seat now held by retiring Democrat Joe Manchin.
Justice urged lawmakers to pass the budget, which goes into effect July 1, without cuts to his proposed spending.
“This is a pile of money. But, we have grown this state to have a pile of money,” he said. “So instead of just sitting there, staring at a pile of money, let’s put the money at work. Let’s make the money work for us.”
