Rainy Day Fund Story Archives - West Virginia Public Broadcasting

Special Session: 6 Bills Have Crossed Finish Line, 9 Bills Being Considered

The West Virginia Legislature is under way in its special session to pass additional appropriations to the budget.

The House suspended rules and passed six of the eight budgetary bills that the Senate passed and sent over Sunday. Those bills will fund things like higher education, agriculture and food banks. One bill that relates to the state’s rainy day fund was sent back to the Senate to consider changes made by the House.

Senate Bill 1001 is the only bill that has yet to make it out of the House. It funds the Department of Human Resources, and directly affects Intellectual Developmental Disabilities waivers.

That bill was amended Sunday by Senate Finance Chairman Sen. Eric Tarr, R-Putnam, to require DHR to receive a signature from the secretary of the department to move line item funds around within the department. Some say this will create more transparency, others worry that it will bog down the department with more bureaucracy.

The Senate suspended the rules and passed another six bills Monday and sent them to the House for consideration. The Senate only has one more bill left to send to the House. That bill would require addiction treatment facilities to be fully licensed and meet other requirements before they can be contracted by the state for patient care.

Even though this bill does not appropriate money for governmental spending, proponents of the bill say it will save the state money and therefore is relevant to the current special session.

So far, six bills are completed legislation this special session and await a signature by the governor.

Rainy Day Funding Formula Changed By Legislature

The West Virginia House of Delegates passed a Senate bill Monday that makes changes to how much money is set aside into the state’s rainy day funds. For the bill to become law, the Senate must concur with an amendment.

Updated on Monday, May 20, 2024 at 6 p.m.

The West Virginia Senate approved of the amendment made by the House of Delegates to Senate Bill 1015. The bill has passed and the rainy day funding formula has been revised.

Original Story

Rainy day funds A and B together have approximately $1.25 billion. The current funding formula requires them to have 20 percent of the operating budget, budget surplus and any supplemental appropriations.

The rainy day fund is necessary, generally, but also important to the bond agencies that allow the state to issue bonds and raise money for large projects. A stable rainy day fund means better bond ratings. In consumer terms, this is the equivalent of having a healthy savings account and a high credit score.

The bill that passed the House Monday, Senate Bill 1015, by a slim margin, changes that to 20 percent of the operating budget alone, meaning the state will only need to set aside about $934 million.

Del. Bob Fehrenbacher, R-Wood, said he felt the rest could be spent on state projects.

“I think what that does, it gives us as the legislators the burden to be good financial stewards and whether or not we can redirect it to investments to infrastructure to personal income tax reductions. That’s the challenge that we have to use.”

House Finance Committee Chairman Vernon Criss, R-Wood, explained that the state is receiving 5.6 percent interest on Rainy Day A and Rainy Day B has a 6.7 percent yield.

“If you’re concerned about continuing to reduce your personal income tax, then we need to generate more in our economy,” Criss said. “So far over the last six or seven years, our biggest ability to do that is with our own dollars, our own investment dollars. We allow the agencies to go forth, to go to private enterprise and cut a deal to bring them here. And now we’re seeing the fruits of our labor, because we’ve had those dollars available to do that. So if you want to continue to help get your personal property or personal income tax cut rates, we need more economy, we need to drive more jobs here, more businesses here.”

Criss noted a period in 1989 when the state was in serious financial trouble.

“We went through a time period because of a change in our tax system that we couldn’t pay the bill,” he said. “Because we did not do the proper thing at that time. We cut it off immediately. And when we did that, it disrupted our cash flow. And it disrupted our tax base situation. And it took us a generation, 25 years to get back to the point that we’re going to be okay.”

The bill passed with a vote of 53 to 40 and returns to the Senate for its concurrence.

Criss also said the state expects approximately $750 million in excess revenue at the end of this fiscal year. Another special session in August to distribute that money is possible.

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.”

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.