West Virginia Rainy Day Fund 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.

Post Special Session, Bills Passed And Failed

Earlier this week, 35 of 44 bills proposed in the recent special legislative session passed. But what about the bills that failed?

The special session included about $30 million to address the ongoing crisis in the state correctional system, $12 million for volunteer fire departments and EMS, and $45 million to help Marshall University establish a Cybersecurity Program. Several other passed bills will make a mark on the state.

Gov. Jim Justice, who called the legislature into special session to address the 44 bills, said corrections and roads were his top priorities. Senate Bill 1026 appropriated $150 million to the Department of Highways. Justice said in a media briefing that road maintenance funding makes more money for the state.

“We have made incredible progress there,” Justice said. “It’s an economic driver beyond belief.”

Other passed bills include allocating $4 million to help make the West Virginia Culture Center compliant with the Americans with Disabilities Act and $1 million dollars that will replace worn patient beds in state veterans’ hospitals.

In 2019, the legislature eliminated the state severance tax on timber. But that left the state forestry department without a source of income for fire suppression. That’s according to Senate Finance Chairman Eric Tarr, R-Putnam.

“So we went back in and put in about $4 million for fire suppression equipment for forestry,” Tarr said.

Find a complete list of passed special session bills here.

The nine bills that did not pass included funding denied for the Attorney General’s technology litigation staff, some state park repairs, mine reclamation emergencies and rejected appropriations to the Department of Revenue.

Tarr said there was nothing inherently wrong with the bills that did not pass. He said when the House of Delegates rejected a procedural funding bill that incorporated a rainy day fund “smoothing” mechanism, it greatly reduced the surplus money available to allocate.

“Fixing that problem would have reduced the rainy day transfer from $231 million to about $87 million,” Tarr said. “So you have to go through and prioritize some of these spends. It really comes down to ‘Do you take the the miser ideology, or do you take an entrepreneurial approach, and invest in the state?’”

Tarr said “I can’t say that what we did aren’t the end all solutions, but they are really big steps toward comprehensive solutions that we do with these issues.”

The nine failed bills include:

HB 101 – Relating to combining the totals of the Revenue Shortfall Reserve Fund and Revenue Shortfall Reserve Fund

HB102 – Supplementing and amending the appropriations to the Department of Revenue

HB 108 – Relating to pretrial release

HB 111 – Authorizing agreements for reimbursement for certain training costs and to authorize the division to cooperate with the Supreme Court of Appeals on developing a comprehensive transportation plan

HB 113 – Relating to making West Virginia an agreement state with the United States Nuclear Regulatory Commission

HB 118 – Supplementing and amending the appropriations to state board of education

HB 135 – Supplementing and amending the appropriations to the Department of Environmental Protection

HB 136 – Supplementing and amending the appropriations to the Department of Commerce, Division of Natural Resources

HB 140 – Supplementing and amending the appropriations of public moneys out of the Treasury from the balance of moneys remaining as an unappropriated surplus balance in the State Fund, General Revenue, to the Attorney General

W.Va. Medicaid and Rainy Day Fund Gets Boost from Revenue Surplus

Nearly $37 million in general revenue surplus money will be given to West Virginia’s Medicaid program as well as the state’s Rainy Day emergency reserve fund.

Gov. Jim Justice made the announcement in a press release this week. The nearly $37 million will be divided in half – about $18 million for Medicaid and the other $18 million will go to the Rainy Day Fund.

Justice said this past year West Virginia has brought in “hundreds of millions of dollars more than we ever dreamed of,” and he said he’s proud to be using it to support and secure a “better future” for West Virginians.

The official surplus for Fiscal Year 2019 totaled $511 million above original budget estimates.

West Virginia Department of Revenue Secretary Dave Hardy said the accomplishment marks 2019 as the single greatest year of revenue growth in West Virginia’s history.

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.

State's Bond Rating Dropped a Notch in Coal Freefall

Standard & Poor’s has dropped West Virginia’s bond rating amid the coal industry’s downturn.

The agency announced the drop Thursday from AA to AA-minus. It also said the rating’s outlook is stable.

Standard & Poor’s credit analyst Nora Wittstruck said the downgrade was due to weakness in the energy sector, and particularly, coal. The agency views the challenge as long-term, not cyclical.

Standard & Poor’s praised West Virginia’s Rainy Day Fund and demonstrated willingness and ability to tackle large-scale financial challenges. The agency cited progress addressing unfunded pension liabilities.

Amid falling coal and natural gas revenues, West Virginia’s still hasn’t passed a budget for the fiscal year beginning July 1. The Republican-led Legislature and Democratic Gov. Earl Ray Tomblin are negotiating tax hikes, cuts and use of reserves.

Gov. Tomblin had this to say in a press release regarding the rating.

“Throughout my years of public service, I’ve worked hard to create a strong West Virginia by improving the state’s business climate, addressing our long-term liabilities and creating one of the strongest Rainy Day Funds in the country. Over the past four decades, we’ve made significant progress. Today’s announcement by Standard & Poor’s is disappointing, however it is not entirely unexpected as other states whose economies are largely dependent on the energy sector have experienced similar actions.

“Continued economic growth will take time, and in the short term it cannot fix the significant challenges we face as a state. For months, I have urged the Legislature to adopt a responsible, structurally sound budget. Based on today’s action, objective analysts on Wall Street agree.

“If we don’t take proactive steps to develop a stable path forward that does not rely on one-time monies and even deeper cuts to cover long-term and recurring needs, the economic and budget challenges facing our state will only get worse. We have worked too hard and come too far to allow that to happen, which is why I continue to push for a budget that takes into account the systemic changes in our state’s economy and will put us on the path to a brighter financial future.”