Limit Rainy Day Fund Use
West Virginia legislators and Gov. Earl Ray Tomblin will have to raid the state’s Rainy Day Fund to balance the budget for the upcoming fiscal year. They should treat money there like they would a hot stove, however – touching it only if absolutely necessary.
Legislators are meeting in special session this week to adopt a budget for the year beginning July 1. There is virtually no way to balance it, in part because of new spending initiatives, without dipping into the $922 million Rainy Day Fund.
Most members of the House of Delegates agree with the plan Tomblin announced earlier this year, to limit use of Rainy Day money to $83.8 million. Some in the state Senate think use of as much as $125 million would be acceptable.
At first glance, taking that much out of a reserve fund that is approaching $1 billion may not appear to be a problem. But it is a big one, both for the current year and in terms of setting a precedent for the future.
When lawmakers established the Rainy Day program years ago, they meant it to serve as a buffer against a catastrophe – perhaps a natural disaster or some unforeseen financial challenge.
Use of Rainy Day money this year falls into neither category. It will drain cash the state may need in case of a real catastrophe.
Again, it probably is impossible to avoid use of some reserve funding. That should not be viewed as an open door to taking the $125 million envisioned by some senators.
The difference between their strategy and that of the governor and House is clear: It is about $40 million – money that can be obtained from a source other than the Rainy Day Fund.
House members had concurred with Tomblin’s proposal to divert about $40 million in state Lottery Commission money to the general fund. About $20 million would have come from cash the commission had been slated to pay into an infrastructure improvement fund. The remainder would have been in one-year cuts to state subsidies for horse and dog racing, and to help gambling casinos upgrade equipment. As we have reported, the measure stalled on the last day of the regular legislative session.
Tomblin and House members are right to want to limit use of Rainy Day money. Senators should go along with them, agreeing to the Lottery Commission changes and any other steps needed to stay within the $83.8 million target.