Pay raises and taxes
Governor Jim Justice announced three weeks ago that he wants the West Virginia Legislature to provide for a five percent pay raise for public school teachers, school service workers and state employees, during the upcoming Regular Session of the Legislature.
This is welcome news, although I think the raise should be higher — at least 10 percent for each of the school and state workers. Five percent won’t even match the six percent annual inflation rate now projected.
I hope and believe that the recent high inflation will be temporary. Many factors producing the current round of inflation seem to be related to the disruption of supply lines for products produced overseas, which is disruption caused primarily by COVID-19.
But inflation aside, our teachers, cooks, custodians, bus drivers, troopers, corrections officers, human service caseworkers, highway workers and other public employees are all underpaid now. They deserve significant raises.
Beyond the desire to do right by our employees, I found the governor’s announcement quite interesting. It may have stymied his attempt to eliminate the state’s personal income tax.
The personal income tax brings in almost half of the money going to the state’s General Revenue Fund, amounting to slightly more than $2 billion out of a total General Fund of about $4.5 billion.
It’s from the General Fund that most state workers are paid. If the General Fund were cut in half, it would be impossible to fund a general pay raise for state employees. It would actually cause massive layoffs, and the closure of many schools, prisons and other locations housing state services. The only alternative would be to come up with one or more other taxes to replace the money. What would it (they) be?
Moreover, there will be a proposed amendment to the state constitution before the voters in the 2022 general election giving the Legislature the authority to eliminate or reduce both the personal property tax on automobiles paid by individuals (the “car tax”) and the personal property tax paid by businesses on inventory and equipment. Most observers expect this proposal to be ratified by the voters.
The car tax produces about $100 million per year, and the inventory/equipment tax produces about $400 million per year. That entire $500 million goes to local governments (counties, cities and local school boards), not to state government.
But legislators promoting the amendment have assured local government leaders that they will somehow be made whole, should the Legislature take advantage of the new powers given to it by the amendment and lower or eliminate either or both of those taxes. So legislators might be faced with using a fourth of the value of the personal income tax just to reimburse local governments for the money they will have lost by the elimination of the car tax and the inventory/equipment tax.
I believe giving our employees decent raises combined with paying local governments $500 million per year will make eliminating the income tax impossible, because I think the public will find any replacement scheme to be really scary.
John Doyle is a delegate for the West Virginia District 67. He can be reached at johndoyle@wvhouse.gov.