Gov. Justice announces changes to Department of Revenue leadership

Officials remain confident state can overcome potential fiscal issues

CHARLESTON -- As he prepares to introduce his final general revenue budget to the West Virginia Legislature next month and navigate changing economic tides, Gov. Jim Justice announced a change at the top of the Department of Revenue.

Speaking during his weekly virtual administration briefing from the State Capitol Building Wednesday, Justice announced he appointed Department of Revenue Secretary Dave Hardy to a vacant seat on the 13th Judicial Circuit in Kanawha County, replacing him with Justice administration Senior Advisor Larry Pack.

Hardy fills the remaining term of the late Judge Joanna Tabit, who died in September. The seat will be up for election next year. Hardy is one of the few remaining cabinet secretaries from Justice's first term, appointed in 2017 to lead the Department of Revenue. Hardy is an attorney and a former member of the Kanawha County Commission and Charleston City Council.

"Dave will do a phenomenal job," Justice said. "The regret is just this: Dave has done an incredible, amazing job as our secretary of revenue. I've worked hand-in-hand with Dave on many, many projects. It's been a lot of fun, but it's been very, very successful. I have every confidence in the world in Dave."

"I'm honored beyond words by Governor Justice's faith in me," Hardy said in a separate press release. "Serving on the Thirteenth Circuit Court is a monumental responsibility, and I pledge to carry my commitment to fairness and justice into every courtroom, ensuring every citizen receives the respect and equal representation they deserve."

Pack will succeed Hardy and serve as interim cabinet secretary for the Department of Revenue. Pack resigned from the House of Delegates last summer to become a senior adviser to Justice.

"Larry is surely a proven leader and has got his act together and knows how to work numbers correctly and accurately," Justice said. "He will do a wonderful job. I congratulate him as well."

Pack is a retired businessman with decades of expertise in accounting and senior living. He founded Stonerise, a senior transitional care company with 17 facilities in West Virginia and Ohio. The company was sold last summer. He also co-founded Pack Lambert and Burdette, an accounting firm that later merged with Suttle and Stalnaker. He lives in Charleston with his wife Lisa.

Pack was elected as a Republican to the House of Delegates in 2020, representing parts of Charleston, South Charleston, St. Albans, Nitro and Dunbar. He also is one of the two state representatives on the Republican National Committee. Pack announced his Republican candidacy in August to succeed State Treasurer Riley Moore, who is seeking the Republican nomination for the 2nd Congressional District next year.

"I am honored to be appointed Acting Secretary of Revenue and I am excited to get to work on behalf of the people of West Virginia," Pack said in a statement. "I believe that the Department of Revenue plays a vital role in making West Virginia a more prosperous state, and I am committed to working with Gov. Justice and the Legislature to achieve that goal."

Justice and Department of Revenue staff are working on the next general revenue budget for fiscal year 2025, which will be presented to the Legislature on the first day of the 2024 regular session in January. Justice said he is looking to present another flat budget with limited increases in spending. Justice approved a $4.884 billion general revenue budget for the current fiscal year beginning in July.

The state ended fiscal year 2023 at the end of June with a $1.8 billion surplus due to artificially low revenue estimates; natural tax revenue growth; high natural gas and coal prices driving severance tax revenues; and influxes of federal spending freeing up state tax dollars to be used elsewhere.

Five months into the current fiscal year, West Virginia has a $286.2 million tax revenue surplus and $157 million in unappropriated monies. The state is also sitting on a $1.2 billion Rainy Day Fund and a $400 million Personal Income Tax Reserve Fund in case the state sees reduced revenues stemming from cuts to personal income tax rates earlier this year.

But while the state has seen several years of record high tax revenue surpluses, tax collections for the current fiscal year are only 14.9 percent above the $4.9 billion general revenue fund estimate as of the end of November. Severance tax revenue is 36.9 percent below estimates and down by more than 83 percent compared to the previous fiscal year. Personal income tax collections remain healthy, but taxes from consumer spending are just above the black line.

Justice has proposed his fifth pay raise for public employees, teachers and staff, and state troopers for this coming legislative session to cover premium increases for the Public Employees Insurance Agency. Pay raises could cost anywhere between $115 million and $120 million.

However, according to testimony Tuesday by Bureau of Medicaid Services Commissioner Cindy Beane, the state will face a $114 million deficit next fiscal year in the Medicaid Reserve Fund caused by several factors, including the end of COVID-19 pandemic assistance, higher prescription drug prices, and changes in the state's Federal Medicaid Assistance Percentage (FMAP). More than 36 percent of West Virginians are enrolled in Medicaid.

Brian Abraham, Justice's chief of staff, said the state has never seen a Medicaid Reserve Fund deficit during the past seven years of Justice's eight years in office. But the plan going forward will be to increase taxes on managed care programs that Medicaid charges.

"There's a fee that they get, and it's on top of what they normally pay," Abraham said. "We have the ability to raise that fee on their behalf. We pay them that money, then we ask the federal government for reimbursement of which, for every dollar spent of that fee, we get back approximately 75 cents. So we think that has the opportunity to nearly, if not completely, close that deficit."

Justice, reminding briefing viewers that he came into office in 2017 with a nearly $500 million hole to fill in the fiscal year 2018 budget, said he felt confident the state can weather any future financial storms.

"If I tell you I think we've got this and everything, I think you can take that to the bank," Justice said. "There's always going to be issues...but we're going to mind the store. We're going to watch what we do and not get out ahead over our skis. We are absolutely going to do the right stuff."