Justice blames Manchin for stimulus provision limiting use for tax reform
CHARLESTON — President Joe Biden’s COVID-19 relief package could be approved by the U.S. House of Representatives as soon as today, but a provision placed in the bill triggered Gov. Jim Justice on a rant against West Virginia’s lone Democratic U.S. Senator.
Justice, during his Monday morning virtual COVID-19 briefing with press from the State Capitol Building, cast blame on U.S. Sen. Joe Manchin, D-W.Va., for a provision in the $1.9 trillion stimulus package that would limit any use of federal coronavirus relief dollars to offset losses due to legislated changes in state tax revenues.
“This is terrible, this is absolutely terrible,” Justice said. “What was written into the law was written in there primarily by Joe Manchin. Joe Manchin is supposed to be your representative, West Virginia. You know what he is doing? He’s trying to hit at me. That’s all there is to it.”
The provision states that “A state … shall not use the funds provided … to either directly or indirectly offset a reduction in the net tax revenue of such state … resulting from a change in law, regulation, or administrative interpretation … that reduces any tax … or delays the imposition of any tax or tax increase.”
“In this situation, (Manchin) has absolutely bent back double triple to hit at me for some reason,” Justice said. “What he is doing is hurting West Virginia. It’s just a slap at West Virginians.”
A spokesperson for Manchin would neither confirm nor deny the Senator’s involvement with that provision. But in a statement Monday, Manchin said Justice should be working with him instead of criticizing him.
“Instead of political attacks that do nothing to help hard working West Virginians, I welcome the opportunity to speak with Governor Justice about the best possible ways to improve the lives of West Virginians with the more than $2 billion in federal funding that I secured for our state in this bill,” Manchin said.
Justice unveiled his tax reform legislation last week, though the bill has yet to be formally introduced in either the House of Delegates or state Senate. It includes a one-year 60 percent cut in most personal income tax classifications, along with a $52 million tax rebate for families making less than $35,000 per year. The total tax reductions total more than $1.087 billion.
The Justice tax reform plans also includes $902.6 million in proposed tax increases in the consumer sales and use tax; a tiered severance tax for fossil fuels; a tax on certain luxury goods; and increased taxes on cigarettes, tobacco products, e-cigarettes, beer, wine, liquor, and soda. Even with additional savings and efficacies, the plan leaves a $90 million gap.
The $1.9 trillion Biden package includes $350 billion in aid to state, county, and municipal governments. The funding can be used to offset losses in tax revenue attributed to the COVID-19 pandemic and shutdowns, though the bill includes provisions prohibiting states from using the funding for state pension plans as well as offsetting tax cuts.
Manchin said the $1.9 trillion package includes $1.25 billion for the state and $624 million in direct funding for county and municipal governments. The bill also includes $800 million for state education funding, $260 million for childcare, $10 million for Head Start, $140 million for broadband expansion as well as $2 million for Wi-Fi hotspots, and millions more in funding for vaccine distribution and rural healthcare.
“Policy differences do not justify personal attacks,” Manchin said. “I want to work with Governor Justice in the best interest of our state.”
Manchin has been a vocal critic of Justice’s handling of the $1.25 billion sent to West Virginia for state and local government COVID-19 expenses last April through the $2.2 trillion federal C.A.R.E.S. Act. Manchin accused Justice last year of taking too long to send money out to local governments in the hope of the federal government easing restrictions to allow C.A.R.E.S. Act funds for budget backfill.
According to the State Auditor’s Office, more than $660 million of the $1.25 billion of C.A.R.E.S. Act reimbursement dollars remains in the accounts of the State Treasurer’s Office.
Justice and state revenue officials said that $400 million of that balance is needed to pay off a $157 million interest-free loan through the U.S. Department of Labor to keep West Virginia’s unemployment trust fund solvent as well as additional funding to replenish the fund. The interest-free period was set to end March 14.
During his Feb. 10 State of State address, Justice called for the creation of a third Rainy Day Fund to help cover possible shortfalls as the personal income tax is phased out. During his remarks before lawmakers, he speculated about the federal government possibly forgiving the state’s unemployment loan, freeing up that $660 million to put into the new rainy day “bucket.”
“What do you think’s going to happen with the Biden Stimulus package? What could happen? They could forgive all of the dollars that we’ve put out towards unemployment,” Justice said last month. “What if we had hundreds and hundreds and hundreds more millions of dollars? Put them in the bucket. Don’t spend them.”
Justice walked back that idea Monday while also criticizing the Biden coronavirus package for limiting how the state can use those dollars.
“My additional rainy day bucket had nothing … in the world to do with taking C.A.R.E.S. money and putting it over here in a rainy day bucket that is for tax relief,” Justice said. “If we have just happened to run our state better than other states that are absolutely run by Democrats and totally out of control … should we not have the option to do with those monies whatever we want to do with those monies that will only help West Virginians and help us become better and bring more and more opportunities to us?”
The Biden plan includes $1,400 in direct payments to individuals making less than $75,000, a $3,000 child tax credit and makes it fully refundable, and extends enhanced unemployment benefits until Sept. 6 at $300 per week – a deal pushed for by Manchin after the House of Representative passed a $400-per-week extension through August.
Both Manchin and U.S. Sen. Shelley Moore Capito, R-W.Va, attempted to make the package less broad and more specifically tailored to the economic issues created by the pandemic. During those negotiations, Justice was on the record calling for a large stimulus package. He stood by those statements Monday, though admitted the bill had unneeded items.
“I frankly believe that really and truly a bigger stimulus package at this point and time is what is needed to finally get up the steepest part of the mountain,” Justice said. “To be perfectly honest, our federal government has a way of putting in so much pork into the situation that … it’s a terrible mistake, but it’s what happens all the time.”
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