2016 Budget Story Archives - Page 2 of 2 - West Virginia Public Broadcasting

House Continues Fight Over Funding Bill

Members of the House of Delegates are still debating a bill that would take money from the Rainy Day Fund to balance the 2016 budget, but it’s a fight over PEIA, the public employee’s health insurance program, that’s stalling the crucial legislation.

Senate Bill 364 was requested by Governor Tomblin to help close a nearly $400 million budget shortfall for this year. It takes nearly $52 million from the Rainy Day fund to help close the gap.

But Democrats in the House tried to amend the bill Monday to take an additional $58 million from the state’s reserve fund to cover another shortfall in the public employee’s health insurance agency – one that will cause costs to increase for state employees and retirees.

“This is the first financial bill that’s come before this House,” said Democratic Delegate Isaac Sponaugle of Pendleton County, “it’s an emergency situation. We are now on the twentieth day of legislative session; nearly one third through, and yet, we have yet to address the PEIA funding crisis in the state of West Virginia.”

The Democratic amendment to help fund PEIA was voted down. Many Republicans called it an irresponsible use of one time monies to fix a long term funding problem.

“We are all very concerned about the PEIA shortfall,” said House Finance Chairman, Delegate Eric Nelson of Kanawha County, “It’s been projected that in fiscal year 2017, so that’s the year that starts July 1 and goes forward, it’s projected that there’s a shortfall of $120 million. There’s not been legislation that has come before any committees yet, but I guarantee you there will be legislation to address that particular shortfall…but we’re talking about using one time monies out of our savings account, our Rainy Day Fund, to fund an ongoing obligation that hits it for one year, but what about the future years?”

The bill to take money from the Rainy Day Fund will be up for a vote Tuesday in the House.

Tomblin Proposes Tax Hikes to Balance 2016, 2017 Budgets

Gov. Earl Ray Tomblin gave his final state of the state address before a Joint Session of the West Virginia Legislature last night. Tomblin spent most of his speech highlighting administrative successes of the past year and previewing some minor pieces of legislation he will ask lawmakers to consider this year.

But, while it was brief, it’s the governor’s budget proposal that’s receiving the most attention from members of the Legislature. The Democratic Governor is asking a Republican Legislature to increase taxes in order to balance not just next year’s budget, but to dig the state out of its current multi-million dollar hole.

“As we work to find new ways to ensure our tax base is both stable and more diverse, we must also seriously consider new revenue opportunities,” Tomblin said during the 50-minute address.

Gov. Tomblin during his 2016 State of the State address.

In an earlier press briefing, Tomblin’s budget staff discussed how the governor intends to fill the $381 million dollar budget gap the state faces by the end of the 2016 fiscal year in June and balance the 2017 budget. His plan includes four major points.

Tomblin has submitted four supplemental appropriations bills to lawmakers for consideration, but says the bills must be passed by January in order to address the 2016 budget crisis. The bills, for the most part, pull one time monies from various accounts and nearly $52 million from West Virginia’s Rainy Day Fund.
Tomblin will present lawmakers with a bill to repeal the state behavioral health tax, a tax paid by individuals and institutions that provide behavioral health services. The governor is proposing replacing the $15 million tax by expanding the state’s durable medical equipment sales tax, but only for medical institutions, leaving individuals who purchase these products for use in-home exempt. Executive budget staffers expect the proposal to be revenue neutral.
The governor is proposing a tobacco tax increase that will for the first time include e-cigarettes. The bill would increase the cigarette tax by 45 cents to $1 per pack, all other tobacco products would raise from a 7 to a 12 percent tax, and the liquid used in e-cigarettes would be taxed at 7.5 cents per milliliter. If imposed by April 1, 2016, as Tomblin is suggesting, the tax would bring in $18.9 million in revenues for the 2016 budget and $78 million each year after. Tomblin has proposed dedicating $43 million in revenue from the tax to help fund PEIA, preventing benefit cuts for state employees.
Tomblin will ask lawmakers to impose a telecommunications tax for the first time, something his staff says 41 other states have already implemented. In the most basic sense, the measure expands the state’s 6 percent sales tax to land line and cell phone bills. The Governor’s Office predicts the tax could bring in $10 million for the 2016 budget if imposed by April 1 and an additional $60 million annually.

Tomblin is also proposing lawmakers make changes to funds that currently are dedicated to paying of the state’s workers compensation debt.
Revenue Sec. Bob Kiss predicts the state will have paid off its decades old debt by October or November of 2016, years earlier than anticipated. Because of that timeline, Tomblin will ask lawmakers to repeal the workers compensation severance tax, a 56 cents per ton tax on coal and a 4.7 cent per mcf tax on natural gas.

The taxes themselves will expire once the debt is paid, but by changing the code now, Tomblin said lawmakers will be able to free the struggling energy industries of the burden months in advance.

Gov. Tomblin shakes hands with Senate President Bill Cole as House Speaker Tim Armstead looks on.

To the proposed tax increases, House Speaker Tim Armstead is adamant West Virginia lawmakers will continue to look for places to cut government spending before they approve any tax hikes.

“It appears to me that this budget and these proposals from the governor are basically asking the people of West Virginia to step in and take more of their hard-earned money and solve some of these issues,” he said after receiving the governor’s proposal.

“I think the people of West Virginia are asking us to tighten our belt first and to look at ways we can make this budget more efficient where we can cut spending rather than saying we just want to run out and raise more taxes to keep the budget the way it was.”

Across the rotunda, however, Senate Finance Chair Mike Hall said he was relieved to hear Gov. Tomblin discuss revenue-generating measures, although he does not believe his chamber will back a telecommunications tax.

West Virginia Expects $353 Million Deficit for Current Budget Year

State officials expect a $353 million deficit for the current budget year as revenues from unearthing coal, oil and natural gas continue to drop.

The Department of Revenue on Wednesday projected a continued dive in severance tax revenue.

West Virginia’s coal industry has withered amid lower natural gas prices, competition from other coal regions, dismal markets, dwindling coal seams and regulations. Natural gas revenues fallen because of low prices.

In a news release, Revenue Secretary Bob Kiss said the struggling severance tax will impact other critical revenues, including personal income tax and sales tax.

Kiss said Gov. Earl Ray Tomblin is committed to ending the budget year with a balanced budget. He’ll share his plan next week.

'Dramatic Decline' in State Severance Taxes Results in Mid-Year Cuts

A severe decline in the state’s severance tax revenues has Gov. Earl Ray Tomblin calling for yet another round of budget cuts for state agencies, as well as other cost saving measures.

Tomblin announced the cuts through a press release Monday evening.

The mid-year, across-the-board 4 percent agency cuts combined with a 1 percent decrease in state aid to public schools– a budget item typically protected from reductions– will help make up for the projected $250 million deficit expected during the 2016 Fiscal Year.

That deficit is largely due to a predicted $190 million shortfall in severance tax collections.

As of Sept. 30, the Governor’s Office says general revenues were short more than $60 million compared to the $12 million shortfall at the end of August. Tomblin’s office predicts that cycle will continue.

“This is a difficult decision that results from several factors beyond our control,” Tomblin said in written statement. “While the cuts we’re enacting today will not be easy, we must maintain a balanced budget and this will help us do that.”

On top of the spending cuts, Tomblin intends to implement some smaller measures, like continuing the state hiring freeze officially put in place in January of 2013 and canceling his annual holiday parties. The more controversial measure, however, is Tomblin’s intention to use Rainy Day Funds to close the expected budget gap at the end of the fiscal year.

“It’s not the way you want to go,” Sen. Finance Chair Mike Hall said Monday of utilizing the Rainy Day funds, “but everybody looks back to when those laws were enacted and that’s what they’re there for.”

Tomlin met with Hall and other legislative leaders Monday.

The fund, which contains more than $800 million, collects a portion of the surplus funds left in the state budget each year. Last year, Tomblin took some $14 million from the fund to balance the Fiscal Year 2015 budget.

Pulling from the fund has been criticized by Republican lawmakers in the past, but Hall said it could be worse.

“It’s not a happy place, but a lot of states have completely depleted their rainy day funds,” he said. “There’s a revenue shortfall and [we] have a reserve to fill the gap at this time rather than raising taxes.”

Hall believed even if money is taken from the emergency fund to balance the FY 2016 budget, there will be enough left to protect that state’s credit rating. Failing to make payments on major debts, like the state’s workers’ compensation or retirement system obligations, would affect the credit rating more immediately, he said.

W.Va. Lawmakers Approve Budget Using $23M in Rainy Day Funds

West Virginia lawmakers have cleared a budget that relies on almost $23 million in reserves. The Republican-led Legislature voted Wednesday on the…

West Virginia lawmakers have cleared a budget that relies on almost $23 million in reserves.

The Republican-led Legislature voted Wednesday on the House-Senate budget agreement. Some votes crossed party lines.

The plan wouldn’t depend on major tax or fee increases, like the cigarette tax hike that fizzled during the 60-day legislative session.

In a difficult budget year, there aren’t major pay increases, either. A small pocket of nationally certified teachers in low performing schools would get $2,000 raises.

Democratic Gov. Earl Ray Tomblin’s budget calls for $15.5 million from reserves. Republican Sen. Mike Hall says Tomblin’s budget depends on millions more from two bills that didn’t pass.

Tomblin can veto or reduce individual budget items.

Lawmakers Begin Work on 2016 Budget

A conference committee of seven members of the House of Delegates and seven members of the Senate began work Monday on finding compromise in their budget bills. Each chamber approved their own version of the Fiscal Year 2016 budget last week.

Senate Finance Chair Mike Hall said each chamber is walking into the negotiations with some priorities.

In the Senate, members chose to approve a bill that contains a $6 million increase in funds for the West Virginia State Police and their forensics lab.

Because of staffing shortages, Hall said the lab has a backlog of thousands of cases which in the end increases costs for counties.

“The problem there is that if somebody is stuck at a regional jail waiting for their trial and their trial is delayed and delayed and delayed, the speculation is the counties are paying on the low end $13 million, on the high end $25, $30, $40 million of regional jail costs that if these things were done quickly would save a lot of money,” Hall said Monday.

“So, this $6 million is not just being thrown to the wind. There is a significant return on investment for the counties.”

The House is also looking to get a “return on investment” for their dollars, choosing to prioritize Community and Technical College funding in their budget.

Gov. Tomblin’s proposed budget included a 1.$ percent across the board cut for Higher Education. The House chose to restore the cut funds to all but one CTC in the state.

“We have a lot of need in our Community and Technical Colleges right now, especially with the growth in certain areas like the oil and gas in the north as well as in the Eastern Panhandle with needs in increased enrollment,” Nelson said.

“So, we just felt that we were putting money back to where it was going to have the biggest return going forward.”

Because of other differences in budget lines, the chambers differ, in the end, in the amount of one-time dollars pulled from the state’s Rainy Day Fund.

Delegates have passed a bill taking about $21 million from the Rainy Day Fund while Senators needed around $27 million to balance their proposed budget.

Governor Tomblin used $15 million from the one-time reserve for 2016, but said he will be working with lawmakers during budget week to keep the number below $30 million.