CHARLESTON – While making his last tax revenue report to a packed room of state employees, lawmakers, and supporters, Gov. Jim Justice said Monday he will call lawmakers into an August or September special session to make further cuts to the personal income tax and pass a tax rebate for childcare.

Justice made his eighth revenue report since taking office in 2017 at the Culture Center Theater on the grounds of the State Capitol Complex in Charleston Monday afternoon, inviting lawmakers to join him on stage to cut ribbon for a possible further cut of the personal income tax and flipping a switch, with confetti shooting off and balloons falling from the ceiling.

West Virginia ended fiscal year 2024 Sunday with more than $826 million in surplus tax collections for the state’s general revenue fund, collecting more than $5.7 billion over the last 12 months. More than $3.7 billion has been collected in surplus tax collections during Justice’s nearly eight years as governor, with billion-dollar investments in infrastructure, tourism, education, and more.

Justice called on lawmakers to support legislation in August to cut personal income tax rates by 5%. That would be on top of a potential tax cut trigger that would be determined in August and go into effect in calendar year 2025 in January. A 5% personal income tax cut could return as much as $115 million to taxpayers.

“I’m going to challenge you in every way to find some way somehow, if it can be done and still mind the store in absolutely the most prudent way we possibly can,” Justice said. “Don’t be afraid … we can cannonball into the pool right now.

“It will be tough, but there is a way to do it,” Justice continued. “All of us can work together and try to do it and try to do it now. It’s not our money; it’s the people’s money, and if there is a way to do it and put more money back into people’s pockets, you know what will happen? They will spend it here. The multiplier effects on those dollars will absolutely make us better.”

House Bill 2526, passed during the 2023 legislative session, cut personal income tax rates by 21.25%. Included in that law was a trigger formula for further reducing personal income tax rates every calendar year – determined every August by the Department of Revenue – by comparing general revenue collections in a previous fiscal year minus severance tax collections compared to the base year of fiscal year 2019 and tied to the non-seasonally adjusted consumer price index. The maximum cut that can happen is 10% each calendar year.

Larry Pack, cabinet secretary of the Department of Revenue, has previously said that the August personal income tax cut trigger could be between 1% and 2%, but he changed that estimate Monday to between a 3% and 4% personal income tax cut. An additional 5% personal income tax cut – if passed by the Legislature next month – could mean anywhere between an 8% and 9% tax cut beginning in January, returning to taxpayers between $184 million and $207 million depending on the August trigger.

Speaking after Monday’s announcement, Pack – the Republican candidate for state treasurer in November – said he believes the numbers are there to support additional personal income tax cuts on top of the automatic tax cut trigger. Combined with the 21.25% personal income tax cut in 2023, Pack said the new proposed cut and the personal income tax trigger could result in a total 30% cut by the time Justice leaves office in January 2025.

Pack said the Justice administration will need to sit down with lawmakers to determine priorities to ensure the state can avoid any future economic effects from further personal income tax cuts for whoever voters select as the next governor in November.

“I think we need to sit down and talk about the priorities for the next couple years with the Legislature to give them our ideas about how we’d come up with this roughly $100 million in the budget,” Pack said. “Some of it also could be timing. When does it come into play? Do we, do we tranche it in over three or four years, or two or three years?”

Both state Senate President Craig Blair and House Speaker Roger Hanshaw were in attendance for Justice’s announcement Monday. Both were hearing the proposal for the first time and were non-committal, though both said they intended to discuss the proposal with their members.

“We’ve done well over a $1 billion dollars in tax reductions,” said Blair, R-Berkeley, referring to several tax cuts and eliminations since 2017. “I share the governor’s desire to reduce the personal income tax, but I don’t know where we’re at on this right now, and I don’t know where the votes are at this point in time. So, we will go back, we will crunch the numbers, and we will look at what we can do.”

Hanshaw, R-Clay, said Justice’s desire to phase out the personal income tax is well known and a view shared by many Republican lawmakers, though the executive and legislative branches have butted heads in the past on the best way to phase it out. Personal income tax collections make up nearly 40% of total collections for the general revenue fund.

“His announcement this morning on how we might pursue additional income tax cuts is not necessarily a surprise,” Hanshaw said. “We’ve not discussed it until today, but it’s always been his priority for the last at least three years. So, it’s not unexpected that he would call for some additional expansion of that today. We’ll be talking about it over the next couple of months.”

Also in attendance for Justice’s tax cut announcement was state Senate Finance Committee Chairman Eric Tarr, R-Putnam. Tarr said current estimates show the state can handle whatever personal income tax trigger occurs, but any cuts above 4% would need to be reviewed.

“West Virginia is on track with forecasts we have been making since 2021,” Tarr said. “Just as then, I remain cautiously optimistic as all of the legacy industries and new investments in West Virginia scale up. Regarding the Legislature, controlling spending growth and investing in ourselves has been the practice that helped us here, and will continue to decrease demand on West Virginia taxpayers. I’m beyond excited to see so many of our ideas and efforts validated by West Virginia’s growth.”

Justice is wrapping up his second and final term as governor. He is the Republican candidate for U.S. Senate for the seat being vacated by U.S. Sen. Joe Manchin, I-W.Va., at the end of the year. Justice faces former Democratic Wheeling Mayor Glenn Elliott in November. Del. Mike Pushkin, chairman of the West Virginia Democratic Party, accused Justice of trying to win votes with tax cuts.

“Jim Justice is using tax dollars as if they were an extension of his campaign committee,” said Pushkin, D-Kanawha. “He has no plan for how to come up with the money it would take to further reduce taxes, he just feels like there’s a way to do it. This isn’t a tax cut; it’s an attempted bribe.

“The governor likened the proposed tax cut to a ‘cannonball into the pool.’ But what happens when your leap causes a flood for the rest of us. That’s the same kind of financial shenanigans that led to your helicopter being repossessed and your property being sold on the courthouse steps,” Pushkin continued.

Justice has previously said he intends to call the West Virginia Legislature into special session in August to pass supplemental appropriations from available surplus dollars from the previous fiscal year. Justice said Monday he would also put a bill on the special session agenda for his state child and dependent care tax credit, which would allow 16,300 eligible families to claim up to 50% of the allowable federal tax credit. The bill was never taken up by lawmakers earlier this year.

“What we need in this state now is young people. We need people with young families that go to our schools and all of that stuff. We’ve got to have workers,” Justice said. “The two ways I would tell you today that would drive more and more and more goodness to West Virginia is lower the personal income tax as much as you possibly can, and absolutely someway address the dilemma of childcare.”