Civics

Reverse Robin Hood: Will West Virginia Governor Use ARPA Funds to Cover Tax Revenue Shortfalls?

Taking from the poor to give to the rich.

The recent ruling by the 11th District Court that states can cut state taxes and use American Rescue Plan Act (ARPA) dollars to cover revenue shortfalls deserves to be met with criticism and concern. This ruling is a form of "reverse Robin Hood" - taking from the poor to give to the rich.

This ruling comes in tandem as West Virginia Governor Jim Justice is on a public relations campaign to encourage his plan to cut the state's personal income (PIN) tax by 50% over the next three years. The House of Delegates has passed his bill, but its fate remains uncertain as it sits in the Senate Finance Committee.

The Governor’s proposal includes a 50% personal income tax reduction over three years while setting aside $700 million to establish a Personal Income Tax Reserve Fund that almost equals West Virginia’s current Rainy Day Fund. The phase-out would begin with a 30% reduction in January​ 2023 and another 10% reduction in the following two years.

Republicans in the Senate chamber are still bitter about their public fight last fall with Justice over a proposed constitutional amendment that would have allowed them to cut property taxes on personal vehicles and other business expenses, a plan they vastly prefer to Justice's income tax cuts.

They say his bill is DOA. Dead on Arrival.

It seems likely that the Governor plans to make up the lost revenue from his proposed personal income tax cut by using the remaining $677 million of West Virginians' ARPA funds.

If so, with the 11th Circuit this ruling, this is not illegal, but it is sneaky and a total mismanagement of what the ARPA funds that were sent for: to mitigate the impact of the Covid -19 pandemic on vulnerable communities.

In March, Senator Joe Manchin attempted to ensure that federal relief money couldn't be used for state tax cuts.

However, a group of thirteen states, including West Virginia, led by Attorney General Patrick Morrissey, went to court to challenge this rule. The court ultimately ruled in favor of the states, allowing them to use ARPA funds to cover revenue shortfalls caused by cutting personal income taxes.

This decision raises important questions about the use of federal funds and the distribution of wealth in the state of West Virginia. As Governor Justice continues his public relations mid-day listening tours to gather feedback from local leaders and community members, it remains to be seen if the Senate will approve his plan and if the state can weather the cuts.

The 11th court decision and the use of federal funds to make up lost tax revenue give Governor Justice a blank check if he can just get the tax cut approved.

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The West Virginia Center on Budget and Policy and the Tuesday Morning Group are hosting a discussion on Thursday, January 26th, to discuss the remaining American Rescue Plan Act (ARPA) funds for West Virginia and how they can be used to help communities hardest hit by the pandemic. The discussion will focus on the best way forward to draw attention and garner support for the TMG proposal. The TMG has been urging the Governor's office and legislators to invest these one-time funds in the state’s poorest communities.

Please email info@BlackByGod for the zoom link.

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