Governor’s budget taps reserves
CHARLESTON – Amid a budget shortfall, Gov. Earl Ray Tomblin plans to avoid raising taxes and give public employees raises by tapping West Virginia’s rainy-day fund.
The Democratic governor is urging lawmakers to use $148 million in state reserves to balance next year’s budget, including $84 million from emergency-only savings. Dipping into the $918 million pot, which the state has never used to patch a budget, would clear the way for 2 percent raises for teachers and $504 pay bumps for state workers. The raises would cost the state about $42 million.
West Virginia officials face a variety of strains on their budget. For one thing, the state is paying for a larger share of Medicaid bills, though that is unrelated to the program’s expansion under federal health care reform.
West Virginia has lost an estimated $100 million from a flex fuel vehicle credit. And though tax revenues from natural gas producers have climbed, dimming prices of coal have hurt revenues from the state’s staple industry.
State agencies would endure a 7.5 percent drop in their funding, though certain areas such as public schools, higher education and corrections would not take a hit. Tomblin’s budget eases the blow for higher education with a 3.75 percent cut that doesn’t affect grants. Department of Revenue officials said no particular program or agency would be targeted for elimination. Agencies would determine cuts themselves.
Senate President Jeff Kessler and House Speaker Tim Miley, both Democrats, agreed it might be time to use the rainy day account. Department of Revenue officials said scooping $84 million out of it still leaves the state with one of the country’s top emergency reserves. It wouldn’t hurt any financial ratings, either, they said.
“That’s what a rainy-day fund is for,” Kessler said. “It’s for natural disasters, and to get through uneven blips or particular stresses in your economy.”
With natural gas revenues growing, the agency cuts and rainy-day dollars would put West Virginia on track to start running budget surpluses by the 2018 fiscal year, Department of Revenue officials said.
House Republicans, however, questioned whether now is the right time to start awarding raises, given West Virginia’s dire financial state.
Kessler added it’s possible to make it through the 60-day legislative session without raising taxes, except for a few boards and commissions that impose smaller fees. Miley agreed.
“We don’t necessarily have to raise taxes to accomplish what we want,” Miley said. “I don’t see that happening. Certainly no general revenue tax increases.”