Governor's State of the State Speech a Snoozer
Don't blame yourself if you fell asleep or changed the channel for the first time ever during a West Virginia state of the state speech.
Last night's speech from Governor Manchin was uncharacteristically bland & boring, not to mention devoid of big, inspiring ideas to really move West Virginia forward. Tax relief? (crickets chirping) Meaningful public employee pay raises to stem the loss of qualified teachers, state troopers, and correctional officers to other states? (crickets chirping) How about a bold initiative to
Instead of a bold tax relief initiative to transform "Open for Business" from a road sign slogan to reality by adopting broad-based tax reductions over the next decade to be competitive with Virginia (ranked #1 in the Forbes magazine state business climate index--and in which we're 49th), we got a proposal for a state income tax credit to defray the 5% of value-based vehicle privilege tax new residents must pay when registering their cars in West Virginia. Don't get me wrong, this will make becoming a new West Virginia resident a bit less expensive for the handful of people who actually move into this state each year, but it's peanuts when you look at the real picture and does noting to address the fundamental unfairness of the privilege tax. We reduced our corporate income tax from 9% to 8.75% last year, yet we got nothing last night that would have made us competitive with Virginia's 6%. Although the Legislature adopted a small reduction in the punitive business franchise tax last year, we heard nothing about either reducing it further or scheduling it for a full phase-out. Relief from the food tax will continue to drip like a leaky faucet; a reduction to 4% is scheduled for July 1, 2007, and a reduction to 3% is scheduled for July 1, 2008. Why not repeal it now and save thousands of small businesses the administrative headache of having to make at least 2 more adjustments to their accounting systems to tax groceries at a reduced rate? Of our neighboring states, only Virginia (at a reduced rate of 1.5% on the state level and 1% on the local level) still taxes groceries and they're making progress toward eliminating it. Finally, on an even larger scale, no one has even discussed long-term initiatives to reduce our sales and personal income taxes. The sales tax has gradually doubled over the last quarter-century, going from 3% to 5% in 1983 and to 6% in 1988. The 5 brackets of our personal income tax, ranging from 3% to 6.5% have gone untouched since 1987 and no one proposes addressing the marriage penalty (the brackets are identical for both single filers and married couples) or the lack of inflation indexing of the brackets. In 2007, if we had eliminated the marriage penalty and indexed the brackets for inflation since 1987, the top rate of 6.5% would begin at $110,000 for single individuals and $220,000 for married couples instead of its current $60,000 for both. Even with our state's anemic economic growth, a comprehensive tax relief package to 1) eliminate the food tax, 2) reform the privilege tax to treat motor vehicles the same as all other tangible personal property and only tax the sale one time, 3) reduce the state income tax rates by 10% percent across-the-board (1% every year)--which would mean reducing the bottom rate from 3% to 2.7% and the top rate from 6.5% to 5.85% by 2017, 4) eliminate the marriage penalty, 5) institute inflation indexing of the brackets and phase-in this indexing to expand the brackets to what they would be if we had been indexing them for inflation since 1987, and 5) reduce the state sales tax rate from 6% to 4% by 2017 can be done without adversely affecting current revenue levels because the gradual nature of each year's tax cut would both increase economic growth and, to the extent there may be revenue reductions compared to the status quo, could be covered by the small increases we already have from year to year in state revenues.
On the other side of the equation, Governor Manchin proposed raising teacher salaries by 2.5% and correctional officers by $1,000 a year. (yawn) Unlike many states and the federal government, West Virginia has not established automatic, annual cost-of-living adjustments to public employee salaries to prevent inflation from eroding the value of their compensation. At best, the governor's proposal would compensate for inflation since last year. Although I would, in the long term, like to see additional reforms such as hosing cost allowances for the Eastern Panhandle, merit pay to reward outstanding performance and a return to the defined contribution retirement system, I also agree with the WVEA's call for a 6% across-the-board pay raise, especially after they settled for less last year for the since-broken promise of a bigger raise this year. Because of the massive turnover of corrections officers resulting from substantially higher salaries from other states and the growing number of federal prisons in this state, I believe that we should adopt the $5,000 raise desired; on a budgetary level, this raise may actually save the state money by reducing the costs associated with training large numbers of new officers to replace the officers lured to other facilities by their higher pay shortly after being trained in this state.
Finally, I was just incredulous at one of the governor's supposed big ideas: tying "economic development" (pork) funding to counties' efforts on litter control. After the resounding sound of silence after what was supposed to have been the applause line for this initiative, the governor started running through some subsequent applause lines without pausing for the not-so-guaranteed response from a friendly audience.