2016 Budget Story Archives - West Virginia Public Broadcasting

W.Va. Ends Fiscal Year $426M Under Estimates

State revenue officials say West Virginia didn’t end the 2016 fiscal year quite as badly off as they predicted, but they’re still calling it the worst budget year in decades.

Department of Revenue Secretary Bob Kiss said in a conference call with reporters Friday his office predicted the state would end the 2016 fiscal year at the end of June some $464 million below revenue estimates.

In order to close the gap, Governor Tomblin cut state agency budgets and lawmakers approved a number of supplemental appropriations along with pulling money from the state’s Rainy Day Fund.

But the state ended the year only $426 million below estimates, saving West Virginia’s Medicaid program from a $30 million end-of-year cut. The governor instead only cut the program by $8 million.

Still, Kiss said it’s the continued decline of severance tax income that’s hurting West Virginia’s bottom line.

“In 2015, up until about the last quarter of the fiscal year, we were meeting and even exceeding our severance tax estimates,” Kiss said. “So, I think what that shows you is the magnitude. It was a significant challenge.”

The severance tax is the state’s third largest revenue source after income and sales taxes.

Is Medicaid Expansion Contributing to WV Budget Crisis?

In 2013, Governor Tomblin chose to expand the state’s Medicaid program, providing healthcare coverage for 150,000 more West Virginians. Up until this point, Medicaid expansion has had no impact on the state’s budget.

That’s because from 2013-2016, the federal government paid for 100 percent of the additional people covered by Medicaid due to the expansion. For West Virginia, that federal funding totaled 700 million dollars.

But next year, the Medicaid expansion agreement between states and the federal government will begin to change.

“Starting in January of 2017, West Virginia will have to pay a 5 percent match for Medicaid Expansion. In the governor’s budget that’s 14 million extra dollars for next year,” said Renate Pore, director of health policy for West Virginians for Affordable Healthcare.

In 2018, the state will have to match 6 percent, then 7 the following year, until by 2020 the match will cap at 10 percent and approximately 50 million additional dollars out of the state budget to pay for Medicaid.

“Although over time the federal match goes down, if you really look at the implications on the health and wellbeing of the people in the state it’s actually a positive impact,” said Department of Health and Human Resources Secretary Karen Bowling.

Bowling said choosing to expand the state’s Medicaid program was hugely beneficial for both the people of West Virginia and the state’s hospitals. With more people covered by insurance, fewer were going to the emergency room and leaving hospitals on the hook for a bill they couldn’t pay, leading to lower overall healthcare costs in the state.

But advocates like Pore they are worried about how the state will continue funding Medicaid.

“We are concerned about where is the money going to come from for the state match…so yeah it puts a strain on the state budget and I guess you could say it is contributing to the deficit,” she said.

Pore said she thinks both the Medicaid program and the expansion are essential programs for West Virginia.

“But I’m not unrealistic. It is expensive for the state,” Pore said. “And even though we have a great federal match, it’s still a huge cost for West Virginia. The cost to West Virginia next year will be almost a billion – 1 billion – dollars and every year that goes up. So as an advocate my concern is to create some stable source of funding.”

Or Medicaid patients – expansion or not – may soon not have access to care.

Appalachia Health News is a project of West Virginia Public Broadcasting, with support from the Benedum Foundation.

W.Va. Higher Education Could See More Funding Cuts

A new report released by the West Virginia Center on Budget & Policy shows the state’s cuts to Higher Education are among the worst in the country.

The report shows that funding for Higher Education in West Virginia has been cut considerably since the 2007-2008 school year.

Since then, the average tuition price of attending four-year public colleges in the state has risen by $2,135, or roughly 42 percent. The report says this is significantly faster than the growth in median income.

The report also found for the average student, federal and state aid has not kept pace with the rising costs.

The legislature has returned to Charleston this week to discuss ways to fill a $270 million budget gap for 2017. It’s unclear how much Higher Education may be cut again.

Healthcare Providers Ponder Closure if Budget Impasse Results in Medicaid Payment Delays

If you are a healthcare provider in West Virginia today – a dentist, doctor, counselor, therapist – and a Medicaid patient comes into your office for treatment, you might not get paid for seeing them. Or the payment will be delayed for…well you don’t actually know how long the payment will be delayed.

This is all due to the state budget crisis.

In late April, the West Virginia Bureau for Medical Services sent out 24,000 letters to healthcare providers that accept Medicaid warning them that if state lawmakers didn’t approve a budget quickly, there could be a delay in reimbursements for the cost of treating Medicaid patients.

For some providers?

“Approximately 80 percent of our revenue is Medicaid funded,” said Kathy Szafran, President and CEO of the non-profit Crittenton Services in Wheeling.

“So when you are looking at a delay in payment of 80 percent of your revenue, that’s very significant.”

Crittenton is known for its work with young women who are at-risk, pregnant or parenting. But according to their website, they make mental health services available to about 30 percent of West Virginia’s population.

Szafran said that for many of Crittenton’s patients in all of their service areas, this is their only real option for receiving care.

But if lawmakers do not approve a budget before June 30 and Crittenton doesn’t receive payments for 8 of the ten patients they serve, then “the agency will have to self-sustain itself while the revenue grows, which is very difficult,” said Szafran.

Crittenton has an endowment, but Szafran said if they burn through it, then the agency, which has been around for over 120 years, would become unstable in the long-term.

Szafran said to deal with potential funding issues, they will put a hold on hiring new staff, expanding new projects and taking on new clients. If the budget crisis continues and the payments are delayed for an extended period of time, then the agency will be forced to fire staff and close offices.

But the letter from the Bureau for Public Health doesn’t just affect non-profits.

“Nobody is there to back us up if we go under, I mean nobody cares if we go under,” said Carol Buffington, a dentist practicing in rural southern West Virginia. She said even though she is in private practice, about 50-55 percent of her clients are covered by Medicaid.

“West Virginia Dental Association wants us all to take care of the children. That has to be our first priority,” she said firmly.

More than 90 percent of the children eligible for Medicaid in West Virginia are covered by the program.

While lucky non-profits like Crittenton have endowments, private providers like Buffington will have to dip into cash reserves. For her, that’s her retirement. She said continuing to serve the children may cost her the business. Without the Medicaid payments, she could last “maybe 60-90 days.”

Buffington serves on the West Virginia Medicaid advisory board and says she knew the letter was coming. She watched the numbers of the coal and natural gas severance tax revenues dwindled over the past year and a half.

However, both Buffington and Crittenton’s Szafran wondered if the letter was “for real” or if it was just a political ploy to force legislators to reconvene and quickly pass a balanced budget. In the meantime, the clock counts down as both private and nonprofit providers wait to see what the final deal means for them.

Appalachia Health News is a project of West Virginia Public Broadcasting, with support from the Benedum Foundation.

Senator Kessler Reflects on Defeat and W.Va.'s Future

As the poll results came in the evening of Election Day, it was clear Senate Minority Leader Jeff Kessler would not take the Democratic nomination for governor.

But losing the race doesn’t just mean Kessler won’t be moving into the governor’s mansion in January, it means the end of his legislative career, at least for now. Kessler sat down with West Virginia Public Broadcasting to discuss his legacy after nearly two decades in the statehouse. These are some of the thoughts he shared.

About the Campaign Trail

It was a grassroots campaign. I was way under-funded. I spent maybe $250,000. I know some of that was money I carried over from old campaigns; I fundraised myself maybe $100,000. Obviously Mr. Justice spent $2.5 million and he won. I’m comforted by the fact that in the areas that know me best, I won.

I gave it my best shot. The message I was espousing is the truth – if you think whoever is going to take office and not raise some taxes, you’re fooling yourself. My message: investing in people, education, substance abuse programs, and infrastructure – roads, highways, and most particularly broadband? That’s our path forward. Whoever is going to be in that governor’s office, if we are going to move ourselves forward, that’s really what we’re going to have to do.

In Good Hands? Justice v. Cole

I don’t know. I’m concerned.

I’ve seen Senator Cole and while I like Bill personally, I think [republicans] are taking us down the wrong path. I’ve seen the radical republican agenda they’ve been running, whether it’s raw milk or RFRA … and it appears to be based not so much in sound public policy, but in an attempt to consolidate political power.

I haven’t heard anything out of Mr. Justice that would cause me to believe that he truly believes in a lot of the Democratic ideals and values. He’s been very silent during the campaign. I know he’s been a recent convert to the party, having switched to being the Democratic Party back in February of 2015 – then in May filed pre-candidacy to be the governor. I’ve yet to hear a lot of specifics out of him that would lead me to believe he’s going to have a progressive and inclusive agenda that will really attack the issues and double down on the things we need to do.

On the Budget

I predict they’re going to do exactly what I’ve been telling them they’re going to HAVE to do: we have to raise some taxes. Governor Tomblin is now going to advance several revenue enhancement measures. Cigarette tax, probably a consumers’ sales tax, possibly a gasoline tax, a cell phone tax – you’re going to see a cafeteria menu of new tax measures. And we’re going to have to pass at least some of them to raise a couple hundred million dollars, or we’re not going to balance the budget.

We’ve cut 20-25 percent of the budget in the last three or four years. There’s no fat left. You are now going to be cutting into programs that truly will hurt our people: free health clinics, state police barracks, libraries. And cutting funding to education is so counter-productive? I don’t think the senate Democrats will go along with it. I can assure you I’ll rant and rail against it.

Winning the War on Coal

You’ve got to be honest with people and show them a path forward. We need to invest in our people to build our workforce. The biggest challenge we have in our state is we have a low workforce participation rate which means we have so few of our people working. Why? Because they don’t have the skill sets or education to do the jobs that the world is moving into. Research and development, healthcare, things of that nature.

We have to redefine ourselves as a state. We’ve been a coal-dependent economy for 100 years. I tell folks when I walk in a room: “What’s been the most dominant industry in the history of the state?”

"Why are we diverting so much energy into winning a war that, even if you win, you're still last!?" Kessler asked. "It's nonsense."

They’ll say, “COAL!”

I’ll say, “Well is there a war on coal?”

They’ll say, “HELL YEAH!”

“Well let me ask you a question: During coal’s heyday was West Virginia’s economy in the top five, middle five, or bottom five, nationally?”

They’ll scratch their head and say, “Probably the bottom five.”

Why are we diverting so much energy into winning a war that, even if you win, you’re still last!? It’s nonsense.

We need to redefine ourselves like they have in Pittsburgh where they lost their steel industry and became a research and commerce center, an education Mecca for higher education. We’ve got WVU, Marshall, West Liberty, Wheeling Jesuit, we’re right next to Carnegie Mellon, we’ve got the research corridor in north central West Virginia, we’ve got a growing Eastern Panhandle. And yet to continue to pound the drum that we’ve got to have pick and shovel coal mining in order to bring our economy back is just a terrible fallacy.

Lessons from the North for the South

We went through the steel mill shut down and contraction and that’s why I’ve told the folks in the southern coal fields: Don’t tell me I haven’t seen it before. When I first went to the senate in 1997 the leading employer in the state was Weirton Steel. Second was Wheeling Steel. There were 27,000 people working.

And we were going to SAVE the steel industry, by golly. We marched on Washington and had all the politicians on a stage caravans and buses… and guess what? Wheeling Steel doens’t exist anymore and Weirton Steel has about 700 people there. We couldn’t stop it.

Same with Pittsburgh! It was a steel town. You know how many steel mills it has today? Zero. But look at their sky line. It’s all commerce and banking and industry and research and education. Those are the kinds of things we can do.

What’s Next for Jeff Kessler

I’ve been in this legislature for 20 years. You can burn out on doing it. I’ve done everything I can do in that venue. I’ve appreciated my opportunity to serve the people of the state but it was time for me to move up or go home. I’ve got five kids, three of them are at the ages of 10, 7, and 2. I’ve decided that being gone two and three months a year at the legislature living out of a hotel room it just wasn’t fair to them anymore.

I decided we’re going to live under the same roof somewhere. At the end of the day I’ll return to my practice of law, probably make more money, and get to spend more time with my family and wife. Not a bad fall back!

Final Thoughts

I love my state. I’ve given it my all and laid it all on the field and we lost. I’m a big sports fan. Sometimes the best team and the best player doesn’t always win.

It’s been an honor and I’ll continue to help in any way I can to help move my state forward. I do love my state. I truly do. I only want what’s best for it.

House to Take Up Funding Bills Monday

Lawmakers continue to move forward with legislation to balance this year’s budget, and three of those bills will be up for a vote in the House of Delegates on Monday.

Senate Bills 342, 357, and 360 are all aimed at balancing the 2016 budget.

Governor Tomblin’s budget officials say the state will end the fiscal year in June with a nearly $400 million budget gap and West Virginia lawmakers are constitutionally required to balance the budget each fiscal year.

House Finance Chairman, Delegate Eric Nelson of Kanawha County says the three Senate bills were introduced on behalf of the governor and complement each other.

“In an overall summary, they’re basically moving expenditures from Medicaid, from the General Revenue line item, over to Lottery,” Nelson explained, “and so the very first bill that’ll be up is expiring $53 million from General Revenue and moving that to Lottery and within that is roughly $9.8 million for title 19 programs, or senior services, and a follow up bill basically requires immediate expenditures out of Lottery for that $9.8 [million] to help fund the title 19 programs in this fiscal year of 2016, then there is another $10 million that’s being expired out of Lottery to fund other Medicaid services leaving roughly 34 million that will be covered in next year’s fiscal year.”

All three bills will be up for a vote on Monday in the chamber. Combined with funding measures being considered in the Senate and actions already taken by the governor, Nelson says the state is in good shape for the current fiscal year, despite a debate lawmakers had on the floor earlier this week.

Democrats are pushing the Republican majority in the House to take on funding shortfalls for PEIA, the state’s public employee health care program, but Nelson says that’s a task for the 2017 budget.

“Our current fiscal, which ends in June, we’re fully covered; the employees, there is no change, and so what we’re looking at into next fiscal year 2017 that begins July 1, the Governor’s proposed $40 some million dollars of new monies that will basically on an 80/20 split, it’ll be a shared premium adjustment for the employer as well as the employee.”

The governor’s new monies Nelson refers to would come from an increase to the state’s tobacco tax- something that has not yet been proposed to the chamber.