W.Va. Sets Record With Fiscal Year-End Surplus, Results Questioned

The release noted that at the close of the fiscal year, June 30, 2023, at midnight, total collections for the revenue year will come in at approximately $6.5 billion – 10 percent ahead of prior year adjusted collections – marking the first time in state history that final collections for a single year have exceeded $6 billion.

Gov. Jim Justice announced on Friday that West Virginia’s cumulative revenue collections for Fiscal Year 2023 will come in at $1.8 billion over estimate. He said the budget surplus breaks the record for biggest single-year revenue surplus in state history for the second year in a row. 

“I’m going to work with the Legislature to take what’s left unappropriated and continue to make wise investments in what we know will bring us more goodness,” Justice said in a press release. “Things like infrastructure, federal matches, and tourism, because the more we tell the world about West Virginia, the more people will want to live, work, and raise their families here.” 

Looking at the fiscal 2023 year end numbers, Kelly Allen, the Executive Director of the West Virginia Center on Budget and Policy, called this a manufactured surplus. She said because Justice set revenue estimates artificially low, that essentially capped the size of the budget and left state financial and employment crisis situations unresolved.

“Legislators have to pass a balanced budget,” Allen  said. “They have to stick with that top line number that the governor gave them when they passed the budget that had to stay at $4.8 billion, even though we knew more like $6 billion was going to come in. And we’re seeing the results of that with the budget crisis at WVU, with vacancies at our correctional facilities with other crises that are going on. We think of that surplus as a missed opportunity of taxpayer dollars that aren’t getting to where they’re supposed to go, because agencies and other organizations that depend on state dollars haven’t been able to build those into their budgets.”

The release noted that at the close of the fiscal year, June 30, 2023, at midnight, total collections for the revenue year will come in at approximately $6.5 billion – 10 percent ahead of prior year adjusted collections – marking the first time in state history that final collections for a single year have exceeded $6 billion.

In an income breakdown, the release noted:

  • Severance Tax collections set a record of nearly $950 million, a 24% increase from the prior year, with taxes from natural gas accounting for roughly 60% of total collections.
  • Corporation Net Income Tax collections grew at 14% and totaled $420 million, eclipsing a record set 15 years ago in 2008. 
  • Personal Income Tax collections set a new record of $2.66 billion, despite a rate reduction of 21.25% that kicked in after the West Virginia Legislature passed and Gov. Justice signed HB 2526, the largest tax cut in State history.
  • Consumer Sales Tax reached an all-time record of $1.75 billion, growing by about 5.7% from last year, and Interest Income Tax Collections reached an all-time record of more than $132.4 million.

Allen said those record collections are skewed because responsible budgeting requires accounting for inflation’s impact on the budget.

“With inflation, the cost of everything goes up,” Allen said. “Things that the state pays for goes up – salaries for state workers, the cost of health insurance and medical costs, utilities. The costs go up every year a little bit just like they do for households. And by holding the budget flat, that means that the agencies and public organizations that rely on state dollars are able to do less and less with the same amount of money because the dollar just doesn’t go as far. It’s a problem for maintaining services, as we’re seeing in these crises and different sectors all over the state. But it also means that taxes that are being paid by all of us aren’t aren’t getting to the public services that we intended for them to pay for.”

The Justice press release added that, by law, a percentage of the year-end surplus must be transferred to the state’s rainy day fund, this year that amount is approximately $231 million. This leaves approximately $454 million unappropriated. June 2023 total collections are expected to come in at approximately $580 million.

Tomblin: $50M More in Reserves to Patch Gap

Gov. Earl Ray Tomblin expects to take about $50 million more from reserves to cover a pressing budget hole.

The Democrat said Wednesday that the Rainy Day Fund money would help West Virginia get through the current fiscal year ending June 30. Tomblin used reserves and cuts to cover a 2016 gap of about $353 million.

Last week, revenue officials said they expected a bigger gap.

Falling revenues from the diminished coal industry and low-priced natural gas have fueled West Virginia’s budget problems.

Tomblin said that largely because of natural gas prices, withholding tax dollars on royalties are about 70 percent below revenues this time last year.

Tomblin and the GOP-led Legislature still haven’t crafted a 2017 budget short by $270 million. They’re negotiating tax increases, cuts and use of reserves.

The Legislature Today: Cole Says Balancing Budget With Reserve Funds OK in Tight Budget Year

  As the 2017 budget deficit looms, members of both chambers are looking for ways to balance the budget in a tight fiscal year. 

Senate President Bill Cole says additional agency cuts should come from the Governor, but says using the state’s Rainy Day Fund to help fund the deficit is a reasonable measure.

Members of both the House and Senate vote to override Governor Tomblin’s veto of a bill to ban certain second-trimester abortion methods.

In the Senate, a floor debate over the budget questions if the chamber will have a strong position going into negotiations in the House without any revenue increasing measures while in the House, members are one step closer to allowing voters to choose if alcohol in their county should be sold on Sunday mornings.

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.

House Clashes Over Governor's Funding Bill

On the House floor Friday, Delegates were set to consider a bill recently approved by the Senate – a bill to help balance the 2016 budget. Senate Bill 364 was on second reading until members of the GOP majority made a tactical move to block a Democratic amendment.

Senate Bill 364 should have been read for a second time on the House floor Friday, but after a move by House Majority Leader Daryl Cowles, it was held over – at first with no explanation.

The bill would pull some 52 million dollars from the state’s Rainy Day fund to help balance the current budget. Governor Tomblin’s budget officials say the state will end the fiscal year with a 384 million dollar budget gap, but West Virginia lawmakers are constitutionally required to balance the budget each fiscal year.

Democrats aimed to amend the Senate bill by taking additional dollars from the Rainy Day account to help fund state employee healthcare benefits through PEIA or the Public Employees Insurance Agency. The state is struggling to fully fund the benefits and has proposed increasing the amount employees pay for health insurance coverage.

Democrats like Delegate Isaac Sponaugle of Pendleton County jumped on the move by the majority party during the remarks portion of the floor session.

“We believe, we truly believe with over 800 million dollars in the Rainy Day Fund in the state of West Virginia, it’s raining on teachers. There’s a 120 million dollar shortfall. This past year, which we’re talking about, the 35 million dollars in benefit cuts and 33 million dollars drained out of the account. Now this does not put all of 120 million dollars back into the account, but it’s a start.” – Delegate Isaac Sponaugle, D-Pendleton County

Speaker Tim Armstead says the attempted Democratic amendment was a political maneuver, not a real solution to fixing the PEIA funding problem.

“We’re trying to work through the issue of addressing both the PEIA needs and the immediate budget needs of the state, and I don’t think they’re trying to that. I think they’re trying to play political games to try to say, and so they can run out and say, oh, you know, everyone voted against PEIA, no we’re working toward a solution on PEIA with the governor…but the Democrats have come out against their own governor’s proposal to solve the PEIA issue…they’re trying to take the money that their own governor says needs to be put in place to pay our bills now in order to solve this problem, and I don’t think that’s a solution that will work.” – House Speaker Tim Armstead, R-Kanawha County

Armstead_PEIA_Bite.mp3
House Speaker Tim Armstead, R-Kanawha County

Senate Bill 364 will be back on the House calendar Monday. Governor Tomblin’s administration is calling the bill critical to funding the state for the remainder of the fiscal year and has asked lawmakers to approve it by the end of next week.

Gov. Tomblin Nixes Spending, Signs Budget with $15 Million from Reserves

  Gov. Earl Ray Tomblin has signed next year’s state budget after reducing about $11 million set aside for a variety of grants and programs.

The Democrat’s vetoes Tuesday made it possible to take only about $15 million from state reserves in a difficult budget year. The budget passed by the Republican-led Legislature depended on about $23 million from the Rainy Day Fund.

Tomblin reduced 46 line items. They include millions of dollars in combined reductions from state higher education, the state police forensics lab, free health clinics, vehicle purchasing, the veterans cemetery and other spending.

Tomblin’s vetoes also take $2 million from capital outlay and maintenance, reducing the fund to $250,000.

He called the reductions to various grants and services difficult, but necessary.

The next budget year starts in July.

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