By Matthew Young, RealWV
CHARLESTON, W.Va. – With just six days remaining in the 2023 legislative session, tax cuts, pay raises for certain state employees, and PEIA premium increases continue to be the talk of Charleston.
On Saturday, the House of Delegates passed three bills: HB 2526, reducing the personal income tax (PIT); SB 423, providing pay raises for certain state employees; and SB 268, intended to stabilize the Public Employee Insurance Agency (PEIA). Separately, the passage of these bills represent varying degrees of significance. However, the combination of this legislation reduces it to practical irrelevance.
First looking at HB 2526 – lawmaker’s current $776.4 million tax cut plan. It provides a 100% rebate for automobile taxes, as well as a 21.25% “across the board” PIT reduction. According to the West Virginia Chamber of Commerce, the average cost for automobile taxes are “about $220 a year,” and the median income in West Virginia is $26,187. With a 3.31% effective income tax rate, an individual earning the median salary pays $867 annually to the state in PIT. A 21.25% reduction means that individual would save $184.24 per year. Coupled with the car-tax rebate, the average West Virginian would save approximately $404.24 each year.
SB 423 provides a $2,300 salary increase for state troopers and public school teachers. The average starting salary for a public school teacher in West Virginia is $36,096. With a marginal tax rate of 7.42%, after the pay increase, that teacher’s total savings under the new tax plan would be approximately $520.26. A new state trooper, after the pay increase, will make $48,300 per year. Under the new tax plan, their savings would be in the neighborhood of $635 per year.
Now comes the elephant to fill the room – SB 268. Under this bill, those school teachers and state troopers, both of whom utilize PEIA, would see their premiums increase by as much as 26%. Furthermore, should that teacher or trooper’s spouse have access to insurance through their employer but choose to utilize PEIA instead, they will be required to pay the actuarial rate of $147 per month to maintain coverage.
The current average premium for a school teacher on PEIA Plan A is $122 per month. Under SB 268, that teacher’s monthly cost would increase to $153.72. The state trooper’s current rate for Plan A is $143. Their monthly cost would increase to $180.18 should the bill be enacted. If both the state trooper and the school teacher are single, the increase to their premiums would effectively nullify any savings provided via tax cuts. If either are married with a spouse covered through their insurance, their pay raise would be all but nullified as well.
Should all three bills be signed into law, for a married state employee utilizing PEIA, the benefits of the PIT reduction and pay increase would not be felt unless that employee was making more than $61,000 per year. It should be noted that West Virginia’s surplus revenue is now nearing $2 billion.
The 2023 legislative session is scheduled to conclude at midnight on March 11. Lawmakers will need to make the most of the time they have left if they intend to escape the stigma of overseeing perhaps the most controversial and unproductive legislative session in recent memory.
RealWV will provide updates throughout the duration of the session.
