W.Va. Eyes Tough 2016

CHARLESTON – With the state facing a possible $100 million budget shortfall come next July, the question of cutting spending or raising taxes could soon be a real issue for lawmakers.

For now, Gov. Earl Ray Tomblin is asking his department heads to prepare their 2015-16 budgets with no changes from this year’s numbers. This comes on the heels of two consecutive years of 7.5 percent budget cuts for state agencies other than public education and corrections.

“Over the last couple of years we’ve asked agencies to submit a reduction across the board,” state Budget Office Director Mike McKown said. “We’ve left it up to the agencies to decide where to make those cuts. This time of year we send instructions out to the agencies on how to prepare their budget requests. They’ve been told to submit at the base level (without additional cuts) and we left it at that.”

However, McKown said state officials already are warning of a massive funding gap. During his January address on the fiscal 2015 budget, Gov. Earl Ray Tomblin predicted the $100 million revenue shortfall in fiscal year 2016 and beyond.

“That gap has grown substantially,” McKown said, declining to provide more exact numbers on the funding deficit.

McKown said a slowdown in the economy and tax collections are to blame for the drop in revenue.

“The first month of July came in $17 million short of projections, about 6 percent lower than the previous year,” he said. “Last year’s actually came in lower than projected too, so it’s not a good trend.”

Despite the lack of cuts now, McKown said Tomblin will continue to look for areas of savings and ways to tighten the state’s financial belt.

“I just don’t think the governor feels across the board is the way to do it,” McKown said of potential cuts. “More targeted, programmatic cuts will be more appropriate. When (Tomblin) submits his budget in January, it will be balanced. That gap will be closed. There will either have to be cuts or additional revenue will have to be found.”

Senate President Jeff Kessler, D-Marshall, said cuts made during the past few years have resulted in decreased services and more financial woes.

“After two to three years of budget cuts, we’ve reached the point where there is only so much more to cut,” Kessler said. “You can’t cut your way to prosperity, particularly when it comes to education and workforce development.”

Kessler said officials must begin looking at ways to generate more revenue, which may lead to unpopular conversations about taxes.

“I think you are going to look at some real budget crunches without cuts,” he said. “The only way we will be able to look at that is with some sort of revenue enhancements. We’ve had several tax cuts over the years. Now we have to look at those sources of revenue.”

Such a discussion might be easier after the November elections.

Politicians “don’t want a lot of controversy in election years,” he said. “After November, they will have a year and a half before they get into campaign mode again. The governor will be a lame duck in his last term so he won’t have to worry about running again. That might make everyone more willing to talk about these things.”

Kessler said he believes roads and higher education will be top issues in the next legislative session, both of which go hand-in-hand with budget discussions. A new report by the governor’s Blue Ribbon Commission on Highways, which has not yet been made public, likely will paint a dire picture of the state’s crumbling infrastructure, Kessler said.

“Our roads are a mess. The cold, hard truth is we aren’t going to be able to fix our roads without money,” he said. “There is only one way to do it: Tolls or taxes. You aren’t going to have money to fix these roads without revenue. You can’t patch more roads with less people.”

Kessler said he would oppose any further cuts to higher education. Kessler also said he would not support the state dipping into emergency funds to cover budget shortfalls.

“I don’t want to be in a position where we are borrowing out of the Rainy Day fund,” he said.

House Speaker Tim Miley, D-Harrison, said the state needs better planning when it comes to financial issues.

“When you have fat years, sometimes that discussion is not taken as seriously as during the lean years,” he said. “Whether we have a budget shortfall or surplus, we always have to talk about providing an economically efficient government.”

Miley said West Virginia is partnering with the Pew Center as part of the national Pew-MacArthur Results First Initiative to create a plan for fiscal stability.

“It’s a model based upon results-oriented budgeting,” he said. “It’s critical we measure the return on our investment of state dollars.