WVSPS Legislative Update

The West Virginia Legislature convened for its ceremonial opening activities on Wednesday, January 13th. Senator Craig Blair, R-Berkeley, was unanimously selected as Senate President. Roger Hanshaw, R-Clay, was reelected to his leadership position as Speaker of the House. In addition, both houses received the certified election results for the 2020 election from Secretary of State Mac Warner. Both Houses also passed procedural rules related to paying employees and other administrative matters.

As is common in the session after gubernatorial elections (every 4 years), the Legislature convenes for opening activities and adjourns for a month. This pause allows the Governor’s inauguration to proceed on its normal course and also allows the Governor to make personnel changes, as well as develop his policy priorities. Governor Jim Justice has already made some personnel moves within his cabinet, elevating former General Counsel Brian Abraham to Chief of Staff where he replaces capitol mainstay Mike Hall. Governor Justice is also developing an ambitious policy agenda.

The first item on Governor Justice’s agenda is to phase out to elimination the state’s personal income tax. It’s anticipated that the Governor will formally announce his intention to repeal the state’s income tax when he gives his State of the State address on February 10. Justice favors an outright elimination of the tax, but the personal income tax is the largest single revenue stream for the State of West Virginia, generating $2.1 billion a year out of approximately $4.5 billion in total general revenue. It will be nearly impossible to replace half of the state’s general revenue budget without a measured phase-out of the tax and appropriate replacement revenue.

It’s my understanding that the Governor’s top staff has been meeting with members of the House and Senate Finance Committees to discuss his proposal. The preliminary discussions focused on elimination of the personal income tax. Subsequent discussions have focused more on a phase out. The Governor’s staff and members of the House and Senate Finance Committees have discussed making draconian cuts to higher education, reimplementing the food tax, or raising the sales tax on consumer goods from 6% to 7% in order to fund the personal income tax reduction/phase out. Other ideas include implementing a tax on managed care companies and removing the current sales tax exemption on telecommunications services. Notably, even in a phase-out approach to the personal income tax, policymakers will have to find lots of “new money” in order to provide any relief to taxpayers. The current top personal income tax rate in West Virginia is 6.5% for income over $60,000 a year.

There are several additional legislative priorities which will likely be pursued. Broadband expansion is at the forefront of policy discussions given West Virginia’s overall lack of access and the need for access which has arisen from the pandemic. How legislators actually “deploy” broadband remains to be seen.

Another legislative priority involves the Governor’s authority under a declared state of emergency. The Governor’s authority under a state of emergency is vague in code and provided him the basis to impose a broad range of executive orders relating to the pandemic, without any input from the legislative branch. Legislators will need to walk a fine line between curtailing the Governor’s authority without impeding his ability to respond to natural disasters and more traditional emergencies unlike a global pandemic.

COVID-19 liability protections are also going to be a part of legislative discussions in the coming session. Legislative leadership wants to ensure that businesses have adequate protection to safely resume operations without fear of a lawsuit. Paycheck Protection is another important issue likely to receive attention this session. Paycheck Protection prevents deduction of union dues from employee paychecks under certain circumstances. Paycheck Protection would have the practical impact of dramatically limiting the amount of money unions can spend to influence political races.

These policy discussions will continue for the next month until the legislature reconvenes to begin their work. I will keep you apprised of further developments. In the meantime, please don’t hesitate to contact me if you have any questions or concerns.

Best regards,

Will Swann