Make Austerity Policy in W.Va.
Too little, too late. That sums up a mini-recovery West Virginia state government recorded this month after half a year of dismal revenue figures.
During the first half of the fiscal year, revenue flowing into the state’s general fund lagged badly behind estimates used to build the budget. At the end of December, the gap was as wide as $81.5 million.
But things picked up in January. Revenue for that month was $8.4 million higher than had been projected, at a total of $391.7 million.
Even that figure came with qualifications, as Deputy Revenue Secretary Mark Muchow noted. January collections included about $15 million in tax revenue that had been due Dec. 31, but was received too late to be included in that month’s report.
With five months left in the fiscal year, the general revenue budget is $73 million short of what is needed to cover spending legislators approved last spring.
Gov. Earl Ray Tomblin has ordered spending cuts by some state agencies and lawmakers also are working on a strategy to ensure the budget does not reflect a deficit at the end of the fiscal year.
Clearly, austerity needs to remain the name of the game in Charleston. Even if revenue picks up slightly during the remainder of the year, the prospect is that spending cuts will be necessary to keep the budget in balance.
Continuing budget woes this year do not bode well for the future.
Yet, incredible as it may seem, Tomblin proposes spending more next year. His $4.73 billion general fund proposal is $146 million higher than for the current year.
Tomblin proposes balancing next year’s budget by continuing cuts in spending for some state agencies and by tapping into the “rainy day” fund. That money has been building up for years, as a result of previous state leaders’ foresight. They understood some unexpected occurrence – many had a natural disaster in mind – might result in a need for money not available through the traditional budgeting process.
About $1 billion is sitting in the rainy day fund. Tomblin wants to take $83.8 million out of it to balance next year’s budget.
He and legislators should proceed with extreme caution. Planning to spend more next year, even as we find we cannot cover our bills this year, could result in a cascading effect that could wipe out the rainy day fund within a decade or less. That money was intended for emergencies, not year-to-year routine budgeting.
Legislators and the governor should be exceedingly careful to avoid making the same kinds of mistakes that forced many other states to increase taxes during the past several years.