Thursday, September 08, 2005

Manchin Threatens to Veto Food Tax Cut Exceeding 1%

Apparently not satisfied with the controversy he created by unconstitutionally limiting the scope of food tax relief legislation in the current special legislative session, Governor Manchin now says that if the Legislature defies his decree and passes a bill that cuts the food tax by more than 1%, he will veto it, today's Beckley Register-Herald reports.

House Bill 401 would reduce the sales tax on most food products for off-premises consumption from 6% to 5% effective January 1, 2006. Republicans in both houses will offer amendments to the bill to completely exempt groceries from the sales tax and believe there are sufficient votes in both houses to prevail. Even Senate Majority Leader H. Truman Chafin, D-Mingo and political opportunist extraordinaire, opposes the governor's restriction on the scope of this bill and has previously supported eliminating the entire food tax.

Most political observers would tell you that the Governor should have known at the time he endorsed even a minimal food tax cut that he was opening the barn doors for outright repeal. Polls consistently show that over 80% of West Virginians support abolishing the food tax--which was phased out between 1979 and 1981 and reinstated in 1989 amid a severe state budget crisis in which the state couldn't even pay the electric and gas bills for the State Capitol.

West Virginia state government has money to burn. Do you?The state's Comprehensive Annual Financial Reports show that total state tax revenues have climbed from $1.4 billion in FY 1989 to $2.9 billion in FY 2003--an increase of 107%. More impressively, during that same period, sales tax revenues grew from $372 million to $917 million (an increase of 146%) and personal income tax revenues grew from $467 million to over $1 billion (an increase of 114%). From 1989 to 2003, West Virginians' total personal income grew from $23 billion to $42 billion--an increase of just 82%. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index increased by 48% over the same period. During that same period, the state's population went relatively unchanged.

So what do all these figures mean? The tax burden faced by West Virginians has grown faster than inflation and even faster than personal incomes. If overall state tax revenues had only grown at the same rate as personal income, FY 2003 state tax revenues would have been $2.5 billion rather than $2.9 billion. This would have resulted in a savings to the taxpayers of 400 million--enough to completely eliminate the food tax, the business franchise tax, reduce the sales tax from 6% to 5%, and them some. Had state tax revenues only grown at the rate of inflation and population growth--as required in Colorado under the Taxpayers Bill of Rights unless voter approval is given for additional spending--FY 2003 state tax revenues would have been just $2.1 billion--for a savings to the taxpayers of $800 million, enough to reduce taxes even further and pay down the state's unfunded pension liabilities at a substantially greater rate than has been done so far.

Whenever Republicans in the Legislature have proposed tax cuts--whether it's the food tax, the business franchise tax, corporate taxes, personal income taxes, etc.--members of the Ruling Party are never slow to insist the state needs the money and could not possibly do with less, nor could it afford to even slow the rate of growth of future revenues. Whether the taxpayers can really afford to do with less isn't even an afterthought. The love of money is the root of all evil and the Ruling Party in this state sure loves money--your money and mine, to be precise. After 75 years of one-party rule in the Legislature, what do they have to show for it? The 2006 elections are just 14 months away.