Caelan Bailey Published

$400 Million Cliff: Morrisey Projects Wide-Ranging Budget Cuts

man stands at a podium in front of the American and West Virginia flags, speaking
Morrisey briefed media about the state of the budget on Jan. 16.
Caelan Bailey/West Virginia Public Broadcasting
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Today, Gov. Patrick Morrisey held his promised first-week press briefing on the budget, laying out the specifics on “belt-tightening” as the budget faces a fiscal cliff in the upcoming fiscal year, which starts in July.

“The state will have a projected deficit of approximately $400 million and that number is projected to rise more and more in the out years,” Morrisey said.

In contrast to now Sen. Jim Justice’s portrayal of strong state revenue during his final months as governor, Morrisey said his administration “inherited” structural budget issues. 

It took a while to get to this problem,” Morrisey said. “We’re going to have to do a lot of work to change it. 

Morrisey said, based on his administration’s analysis of the state of the budget upon assuming office Jan. 13, those issues centered on relying on temporary sources for ongoing costs and not accounting for increasing demand for state funds towards social services.

“For example, in this year’s budget, there’s approximately $252 million in one-shot revenue to pay for ongoing obligations. Of that $252 million, $153 million is from Medicaid [state match] alone,” Morrisey said. “It’s a significant part of that shortfall in this year’s budget is temporarily being replaced by a one time provider tax cash balance.”

Morrisey also proposed consolidating and restructuring portions of state government to create more “efficiencies.”

Morrisey also said he would bring back six-year budget projections. The Justice administration stopped publicly releasing those projections. During last fall’s special session, lawmakers cited a lack of long-term projections as a sticking point in passing a final personal income tax rate cut during Justice’s term. That final tax cut passed at 2%, down from Justice’s initially proposed 5%.

Morrisey said his team would keep the public updated about proposals to decrease standing government costs through restructuring and balance the budget ahead of the legislative session in February.

Morrisey has campaigned on energy sector growth as a means to provide a stronger state economy, in his inauguration speech on Monday saying, “We’re going to leverage those [energy] resources like you’ve never seen before.”

When asked if current budget discussion involved any changes to severance taxes – a volatile funding source that taps energy sector revenue, one that Sen. Justice said had the potential to plug PEIA’s funding hole during his tenure as governor – Morrisey said his administration is “looking at every single item” but largely pointed to his interpretation of the potential of the energy sector in creating more jobs.

Morrisey maintained his commitment to continuing state tax personal income cuts, part of his economic “backyard brawl” initiative to reach a lower rate than surrounding states.

“I do believe that West Virginia needs to continue to emphasize reduction in taxes to become the lowest in the region,” Morrisey said. “I’m just pointing out that we have a lot of challenges in front of us in order to get to that point.”

Many of the changes Morrisey proposed on Thursday hinge on lawmaking during the legislative session starting in February, a collaboration that Morrisey said he is “looking forward to.”