photo by: Steven Allen Adams
CHARLESTON – Gov. Jim Justice put his signature Friday on the budget for the next fiscal year which includes raises for public employees, a separate bill providing raises to school employees and troopers, and a bill to keep West Virginia’s public employee health insurance program solvent.
Justice held a bill signing ceremony Friday morning in the Governor’s Reception Room for House Bill 2024, the budget bill; Senate Bill 423, providing raises for school teachers, school service personnel, and West Virginia State Police troopers and staff; and Senate Bill 268, relating to the Public Employees Insurance Agency.
Speaking to a room full of state officials, media and onlookers, Justice said this year’s 60-day legislative session was a success.
“We had what I would classify the greatest session in probably the history of this state; so many things accomplished,” Justice said. “We surely at one point in time looked like we had impasses and mountains we couldn’t cross over, and valleys too deep to go through as well. But we did it.”
HB 2024 sets the general revenue budget for fiscal year 2024 beginning July 1 at $4.875 billion, or $9 million less than the budget that Justice introduced on the first day of the 2023 legislative session. The budget bill also takes into account another bill, House Bill 2526. The bill includes a number of tax cuts and rebates, returning more than $800 million to taxpayers when fully implemented.
HB 2526 cuts personal income tax rates across-the-board by 21.25% retroactive to Jan. 1. Earlier this week, the state Tax Division sent updated brackets to employers to begin reducing the amount taken from employee paychecks. The bill includes a formula to trigger future personal income tax cuts of no more than 10% annually until the personal income tax is phased out.
“It sends a message to the outside world that you should come to West Virginia,” Justice said. “It’s a great place to live and we’re on a pathway to reducing our income tax. We’re on a pathway to doing other things in regards to taxes. We’re a welcoming state for your companies, jobs, and just being neighbors.”
Justice originally proposed a 50% reduction in personal income tax rates, beginning with 30% this year and 10% over the next two years. That plan was backed by the House of Delegates, but the state Senate proposed a 15% personal income tax cut tied to rebates in tangible personal property taxes.
All three sides agreed on a compromise at 21.25% for personal income tax cuts, the trigger mechanism, a 100% rebate on vehicle tangible personal property taxes, a 50% rebate on machinery/equipment and inventory tangible personal property taxes for small businesses, and a 100% homestead exemption for veterans with near 100% service-related disabilities.
“I’ve done lots and lots of deals, and I’m a real believer that really the way to do any deal is for us to be grown-ups first of all, and grown-ups worked this out and it was really good,” Justice said. “I proposed a 30% and we got 21.25%. I proposed a 10% and we have a trigger for that 10%. I proposed another 10% and we have a trigger for that 10%. Not only that, but we have triggers for 10%, 10%, and 10% to take us all the way to zero. It can’t be any better.”
More than 42% of the state’s $5.9 billion in tax collections for the general revenue budget in fiscal year 2022 ending last June came from more than $2 billion in personal income tax collections.
The bill also includes more than $1.165 billion in one-time funding placed in the surplus section in the back of the budget to be paid out if the state ends the current fiscal year with surplus tax revenue. The state is expected to end the fiscal year in June with more than $1.7 billion, with more than $1 billion collected in surplus tax revenue as of the end of February. Based on projections from the Department of Revenue, the state could end fiscal year 2024 with $1.2 billion in excess revenue.
The budget bill includes a $2,300 pay raise for executive branch public employees who are paid from the general revenue budget. Senate Bill 423, also signed by Justice Friday, provides a $2,300 pay raise for teachers, school service personnel and West Virginia State Police troopers and staff.
In signing SB 268 Friday, Justice called it close to a permanent fix for PEIA, which was slated to see a $424 million deficit by 2027. The bill returns PEIA to an 80/20 employer-employee match beginning in July for in-state medical care and 70/30 for out-of-state medical care for non-contiguous out-of-state counties.
State employees could see their premiums increase by approximately 26%, though Justice said state employees earning less than $133,000 annually would still see a net increase in pay when factoring their $2,300 pay raise and the tax cut/rebate benefits.
“(The pay raises) backstop the increase in premiums in everything to PEIA,” Justice said. “With anybody … that their pay is less than $133,000 a year will end up with a pay raise and their PEIA covered. To me, it’s a major step in the right direction. Maybe we could have continued to backstop it and everything with just pulling out some surplus dollars and keep kicking the can down the road, but this doesn’t kick the can down the road.”
SB 268 also sets the reimbursement rate for all healthcare providers at a minimum level of 110% of what Medicare reimburses providers, sets numerous requirements for members of the PEIA Finance Board, requires a five-year analysis of potential future costs to the program and an actuarial study of the plans offered by PEIA.
The bill would change the price of the plan for spouses of PEIA plan participants who have access to health insurance coverage to the actuarial value of the PEIA plan, which could cost plan participants an additional $147 per month during the next plan period according to PEIA.
According to figures from the Senate Finance Committee, SB 268 would provide $76 million in savings in year one and more than $500 million in savings by 2027. Speaking after the bill signing ceremony, Justice said he believes the bill will keep PEIA solvent but encouraged future governors and lawmakers to avoid raising premiums in the future.
“I would tell anybody going forward that if this does not completely fix PEIA, don’t go back to the well and just raise premiums. Don’t do that,” Justice said. “If we continue to do as we’re doing and everything, you may have to take a little bit of surplus dollars to underwrite it … If you have to do it, do that. These people work very hard.”
Justice also said that the PEIA bill was part of the package of getting members of the House and the Senate on board a comprehensive tax reform plan and pay raises for public employees.
“The headwind I was running upon was, we probably wouldn’t have gotten the pay raise across the finish line,” Justice said.
Justice’s final bill signed on St. Patrick’s Day Friday was House Bill 3307 establishing the West Virginia-Ireland Trade Commission.