Reason for Budget Optimism?

Republican legislators and Gov. Jim Justice had big, important plans for this year. With the state out of the fiscal doldrums, they said, it was time to move forward.

Or not. Not a single part of the forward-looking agenda was implemented. The school employees’ strike got in the way.

Don’t misunderstand me. State employees were overdue for a pay raise. The Public Employees Insurance Agency challenge needs to be addressed. So the money is being spent well.

But it’s a lot of money — around $110 million for the pay raises next year, plus another $29 million to forestall premium increases for public employee health insurance. That wiped out the additional funds lawmakers expected to have for fiscal 2019, which begins July 1.

What had to be given up to shift that money over to pay raises and the PEIA? Good stuff, unfortunately:

– $35 million for the Department of Commerce to help with economic development.

– $14 million to increase tourism marketing.

– $7 million to provide free tuition for many community and technical college students.

– A plan to begin phasing out the business inventory tax.

Aside from the public employee pay raises and PEIA funding — and, again, both things are important — Justice and legislators accomplished virtually nothing they had hoped for in terms of improving West Virginia’s economy.

Maybe later. No, really, maybe later this year.

You will recall that Justice, in an attempt to preserve some of his budget agenda, had told legislators that they would have $58 million more than he had predicted initially for the fiscal 2019 budget. His original revenue estimate was too low, he insisted.

Republican lawmakers were absolutely right to reject that contention and stick with the governor’s original revenue estimate, made just a few weeks before he decided to tack on another $58 million. Banking on money we may not receive is dangerous. Years of midyear spending cuts ought to have convinced us of that.

But in the long run, there’s a chance Justice may be correct.

One reason for legislators’ fiscal reserve was the February revenue collections report. By the end of that month, two-thirds of the way through the current fiscal year and its $4.225 billion budget, the state had collected nearly $17.5 million less than had been expected. In other words, if we can’t cover fiscal 2018, why should we expect things will be a lot better next year?

Perhaps they will.

For the single month alone, February collections were $8 million in excess of the $272.1 million that had been forecast. And one key line item, personal income tax collections, was up a lot over projections.

Projections on which the budget was based called for $1.142 billion to be brought in through personal income taxes during the first eight months of the year. The actual total was $1.184 billion — a gain of nearly $42 million.

Unfortunately, another critical indicator, sales tax collections, was $20.8 million below eight-month estimates. And the severance tax, a big contributor to the budget, was off by $26 million.

So the signals are mixed. We’ll know more in a few weeks, when the March revenue report is released.

Higher than expected income tax collections may be a sign Mountain State residents are doing better financially and will have more to spend in fiscal 2019. If so, that could mean collections for the general revenue fund will be higher than the current budget, $4.38 billion.

If and when it becomes clear there will be additional money, Justice ought to call legislators back to Charleston for a special session. There, they ought to go back to some of those economic development initiatives. My favorite? Convincing more people to visit West Virginia — and spend their money here.

Myer can be reached at: mmyer@theintelligencer.net.

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