While Greenbrier gets tax credit, Tomblin trims $67 million from budget

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By Dave Boucher, Capitol Bureau Chief
Charleston Daily Mail

CHARLESTON, W.Va. -- Gov. Earl Ray Tomblin cut nearly $67 million from the 2015 budget before signing the measure into law Thursday.

While Tomblin and other state leaders celebrated a bill later in the day that includes a potential tax credit for The Greenbrier with cake, a National Football League coach and a trumpeter, the governor's calls for fiscal responsibility fell on deaf ears for those affected by the last-minute budget changes.

"There's a lot of irony in providing millions of dollars in business tax subsides to a billionaire when you're making smaller cuts (in the budget)," said Ted Boettner, head of the left-leaning West Virginia Center on Budget and Policy, referring to Greenbrier owner Jim Justice.

"That's just a hard thing to swallow."

Tomblin made the cuts to the nearly $4.3 billion in General Fund expenditures using his line-item veto powers: the line-item veto allows and executive the ability to cut portions of a bill without vetoing the entire bill. In a letter outlining the cuts, Tomblin said it was the only way to limit the amount the state would need to dip into the Rainy Day Fund.

"Some of these reductions curb grants and services and, while they are difficult, they are necessary to responsibly manage future year budgets, without raising taxes," Tomblin wrote in the letter.

The funding cuts affected programs that include in-home care for seniors, Family Resource Networks, legal services for domestic violence victims, cars and other equipment for the State Police, in-home family education, Child Advocacy Centers, libraries and senior centers.  

Most of the cuts, about $47.5 million, come from a fund created to help supplement covering Medicaid costs.

"We tried to restore some balance in the budget back to the governor's recommendation without compromising the mission and activity those agencies carry out," said Jason Pizatella, Tomblin's deputy chief of staff.

None of the cuts completely eliminated funding for programs or reduced funding below Tomblin's original budget proposal, Pizatella said.

Facing declining tax collections for 2015, Tomblin crafted a budget using about $84 million of the state's $914 million Rainy Day Fund. The Legislature, after considerable debate during a regular and extended legislative session, eventually passed a budget that included taking more than $140 million from the fund.

It's the first time the state's built a budget with any money from the fund, but lawmakers and state budget officials fear it won't be the last. Therefore, Pizatella said Tomblin thought it was in the state's best interest not to use any more than $100 million from the fund to balance next year's budget.

In his letter, Tomblin argues without any more taxes or other revenue using any more from the fund for this budget could mean drastic dips into the fund in future years.

"As stewards of taxpayer money, we must be committed to fiscal responsibility and not commit one-time surplus funds to increase on-going spending," Tomblin wrote in the letter. 

The governor plans to restore all of the $47.5 million cut from the Medical Services Trust Fund, Pizatella said. About $26 million is coming from the "haircut bill" passed during the special session, most of which comes from an infrastructure fund. There's also about $16.2 million in General Revenue reductions, he said, adding the rest of the money needed will come from somewhere.

Strong fiscal responsibility means allocating funding for the programs you deem most important, argued 

Emily Chittenden-Laird, executive director of the West Virginia Child Advocacy Network.

"I think one of the most demoralizing things is that these folks who do this work on the local level work for little pay and do some of the hardest work of anyone," Chittenden-Laird said. 

"To have a veto, it's an impression that there isn't support for the work that they're doing."

Tomblin cut $200,000 from Child Advocacy Centers, programs that offer services to children who've been abused. There's still about $1.5 million going toward the centers, and there are still funds in the account from previous years, Pizatella said.

Chittenden-Laird knows the funding is the same as last year's allocation, but the programs are growing and federal funds are becoming harder and harder find. Additionally, the Legislature's budget proposal included the $200,000 in extra financing.

"These are real dollars the programs need to operate," she said.

Pizatella said he didn't think the cuts would lead to layoffs or program closures. Chittenden-Laird said they could lead to both.

The second largest of Tomblin's cut takes money from a program that prolonged debate during the Legislature's extra budget session.

The governor cut an additional $3.5 million from the Medicaid in-home waiver program, a service that helps provide care to people who would otherwise need to live in a nursing facility.

The House of Delegates' original budget included $12 million, which would have covered everyone on the nearly 2,300 person waiting list. The compromise bill that passed the Legislature cut that funding in half.

"We'd been given the understanding that $6 million was acceptable," said House Finance Chairman Brent Boggs, who said the governor's additional cut was particularly distressing.

The federal program also matches state funding for the program at a three-to-one rate. Any cuts in state funding mean cuts to that federal match as well, Boggs said.

Chittenden-Laird said she and others representing groups affected by the cuts are hopeful there could be more funding changes made in an extra session called later in the year. Pizatella said there could be an extra session called in May or June to address the budget.

While she's optimistic the extra session could restore some funds, Chittended-Laird said it didn't need to come to that. "It's really an issue of priorities," she said.

Boettner didn't think the potential tax credit for the Greenbrier included in the extension of the West Virginia Tourism Development Act, needed to be one of the state's financial priorities. 

Pizatella said the administration sees the bill, which could provide $2.5 million annually for 10 years in business tax credits to Justice, as a jobs creator that provides an incentive for additional development and investment in the state.

Senate Finance Chairman Roman Prezioso, D-Marion, attended the bill-signing celebration as well. He echoed Pizatella's comments, adding Justice or anyone else who could qualify for the credit wouldn't receive it unless they follow through with construction and create 125 jobs. 

"This is a jobs creator, there's no question about it. It's going to create jobs," Prezioso said.

Justice announced plans for a large medical center at the Greenbrier in 2011. Last month, following the addition of the tax break provision to a bill late in the legislative session, Justice said the center would be part of a larger project that includes creating a training camp facility for the New Orleans Saints.

While both Prezioso and Pizatella said the potential $25 million tax credit would come out of tax revenue not previously created in the state, they acknowledged the project would have created additional tax revenue with or without a credit.

Prezioso said he'd had limited time to review the governor's veto provision, but he downplayed problems with finalizing budget cuts and creating tax credits on the same day.

"I think those are two different issues," Prezioso said.