West Virginia GOP Leader Refused to Pay Teachers with Tax Hikes on Big Oil, His Major Campaign Funder

Tax cuts for oil and gas giants have starved state coffers as teacher pay in West Virginia has stagnated. Senate President Mitch Carmichael has opposed any oil and gas tax increases that could be used to pay teachers decent wages.

[Photo: West Virginia teachers, students and supporters hold signs on a Morgantown street as they continue their strike.]
West Virginia legislators in 2006 slashed taxes on corporations, and over the following years decreased the state’s corporate net income tax rate from 9 to 6.5 percent, where it has stayed since 2014. Spencer Platt/Getty Images

Teachers and students in West Virginia are back in the classroom after a nine-day strike over teacher pay and benefits, which advocates say could have been avoided if the Republican-run state government were willing to consider tax increases for oil and gas companies after slashing those rates in recent years.

GOP leaders not only opposed slight tax increases on oil and gas companies—state Senate President Mitch Carmichael has called for further cuts to oil and gas industry tax rates while these industries fund his campaigns.

Members of the West Virginia legislature and Gov. Jim Justice (R) on Tuesday reached an agreement to give teachers and all state employees a 5 percent raise. The pay hike could come at the expense of Medicaid funding and community college tuition assistance, the Nation reports

Along with stagnating wages, teachers are concerned about cuts to the Public Employee Insurance Agency (PEIA), West Virginia’s insurance program for state employees. Cuts to the PEIA have translated into rising health care costs for teachers, said Gary Zuckett, executive director of the West Virginia Citizen Action Group, an advocacy group based in Charleston.

“Health insurance costs are going up while salaries lag and inflation goes up, so over four years if you’re not getting salary increases you’re losing purchasing power,” Zuckett told Rewire.News. “Some people were looking at premiums increasing by 200, 400, 600 hundred dollars a month, so a $400 pay raise a year isn’t going to cut it.”

The historic teacher strike that shut down every public school in West Virginia began on February 22, the day after Justice signed legislation giving teachers a 2 percent raise starting in July and then a 1 percent pay increase per year in 2020 and 2021. Last week, the West Virginia House of Delegates passed a 5 percent raise on a 98-1 vote, but 19 Republicans in the state senate rejected that proposal and instead offered a 4 percent raise, claiming the state couldn’t afford the additional $13 million that came with a 5 percent pay increase for educators.

“That’s all the money we have and it’s an amazing pay raise,” Carmichael told MSNBC on March 5, claiming teachers were setting a “bad example for students” and should be satisfied with receiving “80 percent of their demands.”

Carmichael’s comments come after years of West Virginia legislators slashing tax rates for the oil and gas industry, starving state coffers and leading to stagnant wages for state workers. Carmichael is among the state legislature’s biggest recipients of oil and gas industry campaign finance money, with American Electric Power, ARCH Coal, and Chevron among his top contributors. The proposal of a modest tax hike on major oil and gas companies never surfaced in the Republican-held West Virginia legislature. 

“It’s hard to find anyone in leadership who isn’t collecting money from the energy industry,” Zuckett said. “They are a powerful lobby here in the state.”

The lack of resources for teachers and public education is the result of a budget crunch West Virginia has been in for years, Zuckett said. A decade ago legislators began winding down business taxes that could have paid for teacher raises and helped fill the funding shortfall in the PEIA. A downturn in the energy industry, on which the state budget heavily relies, has left the state with lagging revenue.

“Going back ten years we’ve been enacting a series of business tax cuts and kept giving away our revenue to the point where when we did have a downturn in the energy economy, we couldn’t bounce back,” Zuckett said.

West Virginia legislators in 2006 slashed taxes on corporations, and over the following years decreased the state’s corporate net income tax rate from 9 to 6.5 percent, where it has stayed since 2014. This, along with other changes in tax policy, diminished state revenue by $425 million each year, according to the Center on Budget and Policy Priorities.

One way to help close the budget gap is to reevaluate the state’s 5 percent severance tax on coal and natural gas extraction, Zuckett said, but proposals to raise that tax have been met with swift opposition by Republicans.

“Even a modest increase [in the severance tax] to 7.5 percent, while leaving plenty for the industry, would have a big impact on the state’s finances,” the West Virginia Center on Budget and Policy wrote in a blog post on February 26. “Increasing the severance tax rate to 7.5 percent would increase tax revenue by $93 million in 2019 and at total $585 million from 2019-2023.”

Justice recently proposed a special session to raise the severance tax on natural gas, but was faced with opposition from members of his own party, most notably Carmichael, who has expressed concern over raising severance taxes and last year supported a measure that would have reduced the severance tax rate on oil, natural gas and coal production even further, to 3 percent.

Proponents of the strike claim the salary increase is long overdue as West Virginia teachers are some of the lowest paid in the country and haven’t seen a raise in four years. In 2016 West Virginia teachers ranked 48th in the nation in pay, making less than teachers in every state except Oklahoma, Mississippi, and South Dakota, according to the National Education Association. The average teacher pay in West Virginia is $45,622.

“The teachers don’t feel like the legislature, up until now, has valued them,” said Zuckett.