WV Center on Budget and Policy > Blog > Budget > Tuition Hikes the Result of Tax Cuts

Tuition Hikes the Result of Tax Cuts

The WVU Board of Governors announced yesterday that the state’s flagship university would be raising its in-state tuition by 8% this year, and by 4% for out-of-state students. The increase amounts to about $500 for in-state students, bringing tuition at WVU to just under $7,000 per year. In addition to tuition, on-campus housing and meal costs are also increasing.

The tuition hike now means that the Promise Scholarship, which once covered full tuition, will now only cover 68% of WVU’s annual tuition costs.

Rising tuition isn’t good news for West Virginia’s workforce. West Virginia already has the lowest levels of educational attainment among its population, and tuition increases aren’t going to help. In fact, a 2011 study found that for every $100 added to tuition, enrollment in higher education will fall 0.25%.

WVU’s Board of Governors pointed to the recent cuts to higher education, $20 million over the past two years, as the reason for the tuition increase. This isn’t the first time, nor will likely be the last time, that the state’s budget cuts have led to higher tuition.

Higher education as a whole has seen a $51.8 million cut over the past two years, but state support had been weakening even before the cuts. Even if enrollment remains flat this year, the state will be spending $1,780 less per student in FY 2015 than it did in FY 2008, adjusting for inflation.

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And while higher education funding was cut in recent years, it looks unlikely that those cuts will be restored. According to projections in the governor’s FY 2015 budget, the state will appropriate less for higher education in FY 2019, than it did in FY 2008. Adjusting for inflation, higher education funding will be down by over $168 million, or 29.4 percent, by FY 2019.

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The reason for the cuts to higher ed? The state has enacted a series of expensive tax cuts since 2006, which have cost the state hundreds of millions of dollars over the past several years. Over half were business tax cuts, including the phase-out of the business franchise tax, a reduction in the corporate net income tax rate from 9% to 6.5%, and several other smaller business tax cuts, which will reduce revenue by an estimated $236 million in FY 2015. Altogether, the tax cuts have amounted to $425 million in forgone revenue. And so far, there is no evidence that these tax cuts have produced any of their intended results, other than driving up the costs of higher education.

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To put the impact of the tax cuts on the state’s budget in context, look back at this post. The revenue lost to the just the business tax cuts would have been enough to provide free tuition to all in-state undergraduate student in West Virginia. 

As for what all of this says about our state’s priorities, I’ll let incoming WVU student government president and former WVCBP intern Chris Nyden have the last word, “When the Legislature cuts funding to higher education, it not only hurts the ability of low-income students to pursue a college degree but it means fewer jobs and a weaker economy. There is no better way to create good-paying jobs, a stronger economy and a better future for West Virginia than investing in higher education. Instead of ineffective and costly tax cuts that are saddling debt on the backs of our future workforce, the state needs to invest in our greatest asset — our students — and create sustainable growth.” 

2 Responses to “Tuition Hikes the Result of Tax Cuts”

  1. Doug Bell says:

    I agree that state’s across the country are doing a disservice by cutting funding for higher education, specifically in the case of West Virginia which has a large population of low income students. Wealthy businesses shouldn’t benefit off of these students and their families. Furthermore, if you consider this more broadly, by cutting business taxes and raising tuition, states are forcing students to take out loans which helps large financial firms at the expense of students and their families. This has created an explosion in students loans which many consider a significant threat to U.S. financial markets.

    However, I think there are other issues at play here that need to be considered. First of all, the state of WV has done a terrible job at diversifying the state’s economy. Politicians remain beholden to the coal industry even as it employees fewer workers every year. Due to this lack of diversity, it seems wise to create incentives to attack new businesses, such as the Pietro Fiorentini Group of Vicenza, Italy which announced yesterday that it is going to build a new plant in Weirton. This creates jobs for those educated in WV which is crucial as many educated West Virginians leave the state due to a lack of jobs.

    Thus, there is a negative and positive to business taxes. What should probably be considered is a short-term tax that lasts for five-to-ten years, after which this tax expires. This would allow business the opportunity to invest in West Virginia and get their business off the ground. When this “grace period” ends, these businesses will have to pay the regular rate of taxation. Moreover, once this tax expires, business should want to support higher education as they will need an educated work force to operate their businesses.

  2. Vincenza Cumbo says:

    There is something I am sure many may link. There is a link between coal and education. You do not want an educated workforce in coal. It is better to keep people down and uneducated giving them little prospects. This allows lower wages and little rebuttal on the part of its work force.

    Yes, the state is beholden to coal. An uneducated work force is what is required to limit knowledge on other alternatives. Keep people fearful and uneducated. Then you can do whatever you like.

    Ask our state legislators if they want their children limited in their educational opportunities. Heck no! Ask them if they wish to keep the competition down for their children, Heck Yes! The legislature has actually made the poor, poorer with less opportunities. And yes, coal is the biggest reason.

    Think of the Dark Ages as a parallel. We need a era of enlightenment in West Virginia. Something the legislature simply doesn’t want.

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