2017-05-24 / Opinions

Facing the financial facts

Lawmakers and Justice fumbled the budget negotiations during the regular 60-day session. The legislature, now in special session, must pass a budget by mid-June to keep the state government operating in the new fiscal year.

Meanwhile, lawmakers are debating tax increases to fill a budget gap and getting rid of sales tax exemptions on a number of products and services.

Delegates and State Senators have debated the wisdom of major tax reform this year. Calls to eliminate the income tax altogether in West Virginia held appeal for many. In the end, lawmakers haven’t proven that the gamble will pay off. What if they eliminate the income tax in hopes of stimulating growth but the growth doesn’t happen? That question deserves a better answer.

It does make sense, however, for lawmakers to be looking at these “structural” repairs to the state’s finances. West Virginia can’t depend on income tax to fuel the state into the future, not with the current workforce realities.

Workforce participation rates are low, meaning many working-age residents do not work for a variety of reasons. The state has an aging demographic, and an unhealthy one. These factors mean fewer people than normal are making wages that can be taxed by the state. Income tax revenue won’t rise unless West Virginians are willing and able to join the labor force in higher numbers, or the state attracts residents who bring their own wealth with them. This session may be the first time lawmakers have truly faced up to this reality, instead of claiming that job creation will solve all the state’s troubles.

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