A by West Virginia Gov. Patrick Morrisey’s administration projects a long-term revenue decline amid a tightening budget squeeze.
The six-year financial plan as of Wednesday released by Morrisey’s administration to coincide with the start of the 2025 regular legislative session projects estimated general revenue will total roughly $5.9 billion in fiscal year 2030 — an 8.8% drop from the state’s fiscal year 2023 general revenue of over $6.48 billion.
Department of Revenue officials showed Senate Finance Committee members in a presentation Thursday that the agency’s fiscal year 2025 official estimate of general revenue collections will be more than $446 million below fiscal year 2024 collections.
That drop is being driven by a $216.5 million, 9.7% decline in personal income tax collections and a $147.4 million, 31.7% decline in corporate net income tax collections, according to the presentation.
Those figures come just under two years after then-Gov. Jim Justice signed into law House Bill 2526, which lowered the income tax in 2023 by an average of 21.25% and set up triggers to allow for future income tax rate cuts.
The Department of Revenue estimated a retroactive personal income tax rate reduction in the legislation would reduce General Revenue Fund collections by up to $114.6 million in fiscal year 2023, $695.6 million in FY 2024, $609.5 million in FY 2025 and $634.4 million in FY 2026 — a total decrease of $2.05 billion. The decline in General Revenue Fund collections would keep increasing in subsequent fiscal years due to underlying tax base growth, the Department of Revenue predicted.
The Department of Revenue’s Thursday presentation for lawmakers noted triggers and tax credits comprising full implementation of personal income tax changes amount to a $426.6 million budget impact, including a loss of $96 million per fiscal year from a 4% personal income tax cut taking effect last month.
Meanwhile, the Morrisey administration projects Hope Scholarship expenses growing to roughly $300 million by fiscal year 2027.
Morrisey backed axing income tax amid revenue decline
Department of Revenue officials presented a balanced budget in the face of what they said was a nearly $400 million budget “gap†driven in part by what Morrisey had said was a $153 million shortfall for the state’s share of Medicaid funding the state has been covering using “one-time money†and $62 million stemming from the West Virginia Public Employees Insurance Agency.
The West Virginia Center on Budget & Policy, a progressive policy research group, has contended the Morrisey administration is setting the state up for an irresponsible overinvestment in the Hope Scholarship, the state’s nonpublic school vouchers program that provides families public money to have their children leave the public school system.
Department of Revenue officials indicated there are no tax increases in Morrisey’s budget recommendations, in line with Morrisey’s call during his gubernatorial campaign to eliminate the state income tax, which taxes people with higher incomes at higher rates than people with lower incomes.
West Virginia’s 17.1% decrease in general fund expenditures from fiscal years 2024 to 2025 easily was the largest decline in the U.S. in that span, according to a .
The Center on Budget & Policy has called for adding new high-income tax brackets and rates and raising taxes on income above $100,000. The report estimated the move would raise $353 million annually in new revenue for the state while giving a tax cut to 60% of residents by adding a fully refundable earned income tax credit worth 25% of the federal credit, returning $648 on average to over 126,000 eligible households.
“What’s holding our state back is not our tax rates,†Center on Budget & Policy Executive Director Kelly Allen said in an email Thursday. “[I]t is our investment in public services that help improve the well-being of families who already live here and the people we want to draw here.â€
