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Budget decisions delayed after lawmakers hit with new $92 million problem

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Budget decisions delayed after lawmakers hit with new $92 million problem
By Jeff Jenkins, WV MetroNews

West Virginia’s budget hole got $92 million deeper Tuesday leaving Gov. Earl Ray Tomblin and members of the state legislature faced with what are anticipated to be painful decisions to make before the new fiscal year begins July 1.

Tomblin submitted updated revenue estimates to lawmakers that predict the “continued downturn in global energy markets” will mean less tax revenue in the coming months, a hole that was already estimated at $354 million just two months ago.

The $92 million addition will force an ending of the extended legislative session and a rewrite of the next state budget, Senate Finance Committee Chair Mike Hall (R-Putnam) said during Tuesday’s budget conferees meeting at the state capitol.

“We are going to call a timeout for a little while and come back and work with the governor’s office, the leadership of the Senate and House, and craft a new budget at a later date,” Hall said.

The legislature was already in disagreement with the governor about the new spending plan before Tuesday’s developments. Tomblin proposed an increase in the state cigarette tax and a new telecommunications tax but neither gained final approval in the 60-day session.

Both Chairman Hall and state Revenue Secretary Bob Kiss, speaking for the Tomblin administration, pledged to work together to come up with a responsible spending plan. Kiss warned the upcoming decisions won’t be easy.

“Whatever that solution is—-is not going to be simple and painless,” Kiss said. “It’s going to require some difficult decisions.”

The House of Delegates approved budget took more than $30 million from the state’s Rainy Day Fund and another $70 million from the sweeping of existing accounts in state agencies. Kiss said the governor isn’t totally opposed to using one-time money if there’s a plan to go with it.

“One-time monies along with a plan, over some reasonable period of time to accomplish structural stability, is very different than, ‘we’re using one-time monies, we’re out of town and 17 (2017 budget) is all right now,'” Kiss said.

Kiss said the governor would like to have a special session sooner than later because the decisions made will impact the lives of state residents, but he’s not in favor of a long drawn-out special session.

“I believe the governor wants to do it as soon as he believes that it is reasonably certain that a solution has been fashioned and can be adopted by both Houses. What obviously he doesn’t want to do, it’s not in his benefit and it’s not in your benefit, when we don’t believe we are ready and have something we can’t pass,” Kiss said.

Both lawmakers and Kiss agreed the choices are limited; further spending cuts, raise taxes or dip into the Rainy Day Fund.

“We still believe it has to be a combination but we are certainly willing to engage you all in a conversation on how we get here,” Kiss said.

Kiss also didn’t rule out the possibility of further cuts in the current state budget although with just more than three months left, the options are limited.

State law requires a balanced budget before July 1. Leaving town without a new budget is rare but not unprecedented. It last happened in 2009 when then Gov. Joe Manchin sent lawmakers home and brought them back to Charleston after finding out how much money the state would receive in the federal stimulus package.

The following is Gov. Tomblin’s full statement about the new revenue estimates:

“The West Virginia Department of Revenue today provided the Legislature with updated estimates for Fiscal Year 2017. New estimates were lowered by about $240 million, which reflects $148 million in proposed tax increases that were not passed by the Legislature during the regular legislative session. It also reflects an additional $92.4 million reduction in estimates to account for the continued downturn in global energy markets, which is affecting West Virginia and several other energy-producing states. The new projected general revenue budget for Fiscal Year 2017 is $4.09 billion.

“Because these updated figures further complicate an already difficult budget process, legislators will stop work on the Fiscal Year 2017 budget today. I urge all 134 members of the Legislature to come to the table with a willingness to work with my administration to find a responsible solution to be considered later this spring. Together, we must agree to a responsible budget that takes these major changes into account while maintaining the critical services on which so many residents rely.”