Take Tax Hikes Off the Table
The new year brought little reason for celebration among state accountants. Continuing a trend that began at the start of the fiscal year on July 1, revenue for West Virginia’s general revenue budget was short of expectations again in December.
By the end of the month, the official budget report showed the state lagging $81.5 million behind projections. Because of bookkeeping quirks, however, the actual deficit was about $65 million.
Do the math: A $65 million shortfall halfway through the fiscal year could balloon into $130 million – possibly even more – by June 30. Clearly, Gov. Earl Ray Tomblin and state legislators need to close the gap.
Mid-year budget woes are nothing new in the Mountain State. Last March, Tomblin had to order a freeze in hiring and lawmakers had to slice money out of the budget when it was revealed a $35 million shortfall existed. It was worse by the end of the year, forcing state officials to empty a special account used for income tax refunds and take money out of Medicaid program reserves.
This year appears to be an even more challenging scenario, however.
Obviously, Tomblin needs to act quickly, perhaps with another hiring freeze and a mid-year spending cut. But legislators will have to work on the problem, too.
What neither Tomblin nor lawmakers should consider is increasing taxes – even if that means severe cuts in state spending. Too many Mountain State residents are struggling to make ends meet. Too many businesses have had to put off expansions and hiring.
State revenue will rebound only when West Virginia’s economy does – and tax increases would delay that.