Sean O'Leary: What Could WV Do With $140 Million?

Charleston Gazette-MailFor the first time in the past several years, West Virginia is not going through a budget crisis. Story link

The multiple years of budget gaps reaching hundreds of millions of dollars have stopped, and the governor’s budget actually projects significant budget surpluses in the years ahead. But instead of using the state’s financial good news to invest in addressing any of the state’s many issues, be it low public employee pay, the poor health of its people, the lack of education in its workforce, and an overall lack of opportunity, Gov. Jim Justice and legislative leadership are planning to double down on the same tired policies that led to the budget crisis in the first place, ineffective business tax cuts.

Senate Joint Resolution 9 (the so-called Just Cut Taxes and Win Amendment) would enact a tax cut for the coal, natural gas and manufacturing industries that would cost the state a total of $140 million per year when fully enacted.

Advocates of the tax cut promise it will lead to more growth and jobs in the state, a claim that is unsupported by any evidence and ignores the state’s recent history of substantial business tax cuts failing to create jobs or promote growth. Instead, those tax cuts contributed a major role in the state’s budget problems, leading to years of painful budget cuts.

Instead of pursuing yet another tax cut that would largely benefit out-of-state corporations at the expense of the state’s families, students and seniors, what if the state took that $140 million and actually invested it in policies that work? Here’s just a sample of what the state could do with $140 million, instead of more corporate tax cuts:

  • public employee pay raise. West Virginia’s public employees are among the lowest paid in the country. The Legislature is debating a 2 percent pay raise for teachers, claiming that any more is unaffordable. But in FY 2016, a 2 percent pay raise for all public employees was estimated to cost $52 million. With $140 million, the state could afford to give all of its public employees a 5 percent pay raise.

  • End the I/DD Waiver waitlist. Currently, there are roughly 1,200 people waiting for a spot to open up on West Virginia’s Intellectual and Developmental Disabilities Waiver Program. West Virginia spends roughly $20,000 in state funding per individual in the program, while drawing down a substantial federal match. The state could get everyone off the waitlist and into the program for about $24 million, while drawing down nearly $75 million in federal funding.

  • Enact a Paid Family and Medical Leave Program. With West Virginia’s aging population and low labor force participation, workplace policies that provide support to those who care for aging family members is especially important. While the federal Family and Medical Leave Act guarantees unpaid time off to care for a new child or ill family member, it covers only about 60 percent of all workers and it provides only unpaid leave.

  • Several states have enacted paid family and medical leave laws that can serve as models for other state efforts. According to analysis from the Pennsylvania Department of Labor and Industry, a state-paid family and medical leave insurance fund would cost between $123 and $281 per worker covered. At that cost, West Virginia could provide paid family and medical leave for all private-sector workers in the state for between $67 million and $154 million per year.

  • Subsidize employment. One direct way West Virginia can get people working is for the state to directly place people who otherwise can’t find work in private- or public-sector jobs. For example, West Virginia participated in a Recovery Act Program that used $2.9 million in federal funds to place approximately 200 adults and 1,200 youth in subsidized jobs at a prevailing wage. By building on existing programs or looking to other state models, like the Florida Back to Work, Mississippi STEPS, Put Illinois to Work and Minnesota Emergency Employment Development, West Virginia could provide subsidies to employ tens of thousands of workers in the state.

  • Enact a state EITC. One tax cut that could guarantee that West Virginia would benefit is a state level Earned Income Tax Credit. In addition to directly raising incomes, studies have shown that the EITC also works to incentivize work and boost labor force participation. Approximately 160,000 West Virginians receive the federal EITC, and more than half the states in the country have created state-level versions of the credit. For $60 million, West Virginia could enact a state EITC at 20 percent of the federal credit, boosting incomes and improving lives of tens of thousands of low income workers in the state.

  • Free tuition. West Virginia currently has a proposal to provide free tuition for certain students at its two-year community and technical colleges, using a “last dollar in” funding concept. The state could expand that even further and provide free tuition to every in-state student at each of its four- and two-year colleges for approximately $123 million, once state and federal grants are accounted for.

Sean O’Leary is a senior policy analyst at the West Virginia Center on Budget & Policy. 

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