Vernon Criss Story Archives - West Virginia Public Broadcasting

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.

Federal Government Asks For $465 Million Back As Legislators Look For Fix

A surprise notification from the federal government that the state must return nearly half a billion dollars in COVID-19 funds has several major funding issues on hold.

These last days of the regular session are typically when state budget issues are debated and resolved.

A surprise notification from the federal government that the state must return nearly half a billion dollars in COVID-19 funds has several major funding issues on hold.

These last days of the regular session are typically when state budget issues are debated and resolved.

But when federal dollars were funneled into West Virginia local school districts in the early days of the pandemic, rules on how to spend that money did not come until later.

Facing crucial budget bill deliberations, the House Finance Committee Chairman, Del. Vernon Criss, R-Wood, said it was a shock when learning this week the federal government was looking at a $465 million clawback of the state’s CARES Act education spending.

“It was just amazing that the feds can do something like this to you,” Criss said. “We’re not the only state they’re doing it today. There are other states that are in the same position. I don’t know to what degree, but this is a sizable amount of money to the state of West Virginia.”

It’s not just education funding that’s in jeopardy. The budget bill passed by the Senate this week did not include Social Security tax cuts and has no mention of state employee pay raises. The House Finance Committee Minority Chairman, Del. Larry Rowe, D-Kanawha, is concerned about the effect on a number of what he calls programming possibilities.

“West Virginia State is in for a $50 million agriculture lab that they need,” Rowe said. “And this, you know, will put that kind of a project in jeopardy in a new project. So and if it moves off several years, that would be a real problem.”

Rowe says he’s concerned this could also affect senior services projects.

Officials from Gov. Jim Justice’s office say the federal expectation was the state would match the federal pandemic grants going to education.

Sen. Eric Tarr, R-Putnam, the Senate Finance chairman, says that’s easier said than done.

“West Virginia is very unique, and how we fund K-12 education relative to a lot of other states,” Tarr said. “Because we’re formulary based, so you can’t just suddenly increase the formula with some of the rules they had around the CARES dollars the way that they would need to spend.”

Now, Criss says the governor’s office is working with the feds on a waiver, showing that they are providing more state money toward education.

“Things like the school building authority that we appropriated, then we authorized the spending a couple days ago, we authorized the monies to go into the account yesterday,” Criss said. “So now is as that bill progresses, then we’ll have part of that $465 million taken care of.”

Criss said the governor’s office is also trying to communicate to the federal government how the state used that money in accordance with the state’s statutes and formulas.

“We’ve done the pay raises with the benefit package, we’ve also confirmed that we’re continuing to put in the monies into the Teachers Retirement Program in the 40-year plan as well as the current amount needed,” Criss said.

Criss, Tarr and the governor’s office all seem confident, with hopes for a quick resolution and no loss of funds. But with a week left in the regular session and no budget yet passed, Criss says the timing couldn’t be worse.

“It’s just poor timing on the Fed announcement to the governor’s office,” Criss said. “And we are here today, knowing that we have one week left, we need to get the budget process concluded on both sides so we could start putting the bills together and come up with a compromise for the first week. So everybody will have an opportunity to see what we’ve got.”

The deadline for putting the budget in isn’t until June 30. Criss said that while the deadline for the budget isn’t technically until June 30, he would have to break a promise and nearly decade tradition of having the budget done by the 60th day of session.

“We’re going to fix it. It’s a one-time thing,” Criss said. “We’ve got the funds available. And it’s just a matter of trying to figure out where they all have to go before the first of July.”

Criss said he thinks that everyone currently included in the budget will stay covered, but that it’s an evolving situation.

“You know, stay tuned,” Criss said.

House Finance Chair Cites Opportunity For Tax Reform Compromise

Chairman Criss said the Senate’s goal is trying to return $600 million back to the public. He said the Senate tax plan is now under House study, with some specific definitions needed.

Will we see any sort of tax reform passed this session? The House Finance Committee Chairman said he’s now had time to digest this week’s sweeping Senate Tax Reduction plan.

Vernon Criss, R-Wood, said he currently supports a proposed phased-in, 50 percent personal income tax reduction. But he also said, contrary to popular opinion, tax reform negotiations between the House, Senate and Executive Branch are underway.

“There has been an open communication between the leadership here in the house and a couple of the leaders in the Senate to be able to talk about what they want,” Criss said. “Once we get some definitions and dig down into trying to figure out what they have proposed, and we obviously have countered. As we all know, it’s a compromising situation in this business and that’s what we’ll have to do.”

SB 424 proposes:

A 15% decrease in personal income tax

A vehicle tax rebate

The elimination of a “marriage penalty” when filing West Virginia taxes

A 50 percent rebate for small businesses on equipment and inventory property tax

A homestead property tax rebate for some service-disabled military veterans.

Criss said the Senate’s goal is trying to return $600 million back to the public. He said the Senate tax plan is now under House study, with some specific definitions needed.

“They need to come up with a definition with some of the ways they’re wanting to do some of the tax, ie, the small business definition,” Criss said. “Also, making sure that the veterans tax exempt homes, that on property taxes that we’re talking about their homes and not commercial property or industrial property that a veteran may own. So those types of things, we still have to work out.”

Criss expects those definitions to be answered early next week.

“We’ve got time and we’ve got the opportunity because now the House has a Senate bill and the Senate has a House bill to be able to work through this,” Criss said.

With less than 30 days left in this session, tax reform looks to be back on the legislative front burner.