State of the State

Justice delivers his third address with surplus

ADDRESS — Governor Jim Justice during the 2019 State of the State Address at the West Virginia State Capitol on the first day of the regular session, Wednesday. -- West Virginia Press Association

CHARLESTON — Gov. Jim Justice laid out his legislative priorities and proposed a budget that keeps spending to a minimum and projects additional revenue surpluses in his third State of the State address Wednesday night.

“I hope tonight I’ll have a lot of good news for you,” Justice said. “Tonight, I’m proud to be sitting and talking to you and not at a podium lecturing to you.”

It’s a vastly different situation for the governor who is more than halfway through his first term. When Justice gave his first State of the State address, he proposed tax increases to fill a nearly $450 million hole in the fiscal year 2018 budget.

“When I got here, we had multiple years of cut budgets,” Justice said. “We haven’t had any cut budgets recently and we’re not going to have one today either. Today we have things that are so good.”

The proposed general revenue budget for fiscal year 2020, which will start July 1, comes in at $4.675 billion. That’s a 1.73 percent increase over the fiscal year 2019 budget Justice proposed in January 2018, which came in at $4.439 billion. Public education makes up 43.4 percent of proposed fiscal year 2020 expenditures, followed by health and human resources at 28.1 percent.

The Department of Revenue estimates that revenue growth will go up by 2.05 percent. So far in the first six months of this fiscal year, tax revenue came in at $185.9 million above estimates, with lottery revenues year-to-date also up 16 percent above estimates. The state ended the fiscal year at the end of June with a surplus of $36.1 million. Justice said these were record-breaking numbers which give him and the legislative some latitude make improvements for West Virginians.

“Today, we have an all-time record,” Justice said. “That’s pretty damn big to me, the biggest in the state’s history.”

Improvements include a 5 percent pay raise for teachers, school service personnel, and public workers. Under then plan, teachers would get a pay raise of $2,120, $1,050 for school service personnel, and $2,370 for other state employees, combined with the second year of a three-year increase for Division of Corrections employees. This is on top of the 5 percent pay raise these state employee classifications received last year after a 14-day strike by teachers and school workers.

Justice also announced the intention to put $150 million in the state’s Public Employees Insurance Agency for long-term stabilization, up from the $100 million he originally proposed in October. The money is

“Putting money into PEIA is a giant first step,” Justice said. “We can do that and that’s exactly what we’re going to do.”

Other education initiatives include increased pay for teachers in math, $5 million for expansion of the Communities in Schools program, and encouraging the Department of Education to combat absenteeism among students and teachers.

Switching to commerce, Justice said the $83 billion China Energy deal to invest in natural gas in West Virginia is still on, with talks between the state and company ongoing. Justice is putting an additional $14 million in the Tourism Division to continue promotion efforts, plus bonds have been sold to renovate state parks.

On the subject of roads, Justice said the Department of Transportation plans to put additional money to fix secondary roads in the state. That will involve shifting road bonding from larger projects. Turning to the RISE West Virginia flood relief program that came to a halt between February and June, Justice hopes to take some of the nearly $150 million in U.S. Housing and Urban Development money for economic development projects and tearing down dilapidated homes around the state.

Justice also joined lawmakers in proposing exempting the remainder of Social Security beneficiaries from having their income taxed by the state. In West Virginia, 78 percent of all Social Security beneficiaries already don’t pay state and federal taxes based on income. According to revenue officials, 10 percent of all income generated in West Virginia comes from Social Security beneficiaries, which is nearly twice the national average.

Exempting the remaining 22 percent of Social Security beneficiaries from having their income taxed would cost the state only $50 million. The states surrounding West Virginia already exempt all Social Security beneficiaries from being taxed, as do 22 other states.

Justice also called for constitutional amendment to eliminate the businesses and inventory tax, which will take a two-thirds vote of both the house and senate before going on the ballot for voter to approve in 2020.

To address the drug epidemic, Justice proposed “JIM’S Dream,” — Jobs In Making You Succeed. The program is an effort to help with drug rehabilitation and train recovering addicts for the state’s job market. The plan would involve $5 million for drug prevention, $10 million treatment programs, $10 million for staff and equipment maintenance at vocational-technical schools. If the recovering addict completes the program, they would be able to take the certificate and get their misdemeanor record expunged.

Justice said the program would be paid for from the budget surpluses.

“These people can’t get jobs,” Justice said. “Why don’t we train them to do something? “Why don’t we absolutely someway somehow let our people who are suffering from drugs go get treatment for free provided that they’ll come out of treatment and go through some kind of training?”

Justice said he is for fixing the banking issues that could cause the medical marijuana legislation passed two years ago from going into effect in July. But he is against legalizing recreational marijuana. Turning to government waste, Justice said he is eliminating 2,007 state jobs that haven’t been filled in the last year. He also endorsed the creation of an intermediate court of appeals.

In the Democratic legislative caucus response to Justice’s State of the State address, Senate Minority Leader Roman Prezioso, D-Marion, and House Minority Leader Tim Miley, D-Harrison, said they agreed with several of the proposals from the governor, including exempting Social Security from taxation and the state employee pay raises. But other proposals, such as eliminating the business and inventory tax and the JIM’S Dream program left them wondering how the state pays for them.

“I think it’s a lot of pie in the sky,” Prezioso said. “You have a lot of ideas that amount to a lot of money. We’re going to have to sit down and decipher and disaggregate all that data. Is there going to be enough money in the budget to pay for it?”

“We’re not in favor of that unless there is a dedicated funding stream to replace that lost revenue,” Miley said. “You can bet your bottom dollar the taxpayers and the property owners will be the ones who make up that difference.”

In closing, Justice asked the public to keep giving him a chance to improve West Virginia.

“All I’ve ever wanted for this state is goodness for its people,” Justice said. “All I want to do is help and do all the good that can be done for our people.”