Perfect (Fiscal) Storm Coming?

The proverbial perfect storm may be bearing down on West Virginia, but you wouldn’t know it to watch what’s going on in the state Capitol. There, some people probably are making contingency plans for dealing with the snowfall predicted for Sunday night.

All the while, they are ignoring storm warnings from budget analysts.


– A year ago, legislators approved a budget they thought was based on realistic revenue projections. They were wrong. With four months left in the fiscal year, collections already are $70 million to $80 million short of previous expectations.

– Even the most pessimistic predictions of the crash and burn of legalized gambling as a budget prop are being proved wrong. It’s worse than expected. State Lottery Commission revenue from table gambling alone in January was 35 percent below the level a year ago.

– Legislators’ reaction has been to loosen their budget belts. Gov. Earl Ray Tomblin submitted a spending proposal with a $146 million hole in it. Some lawmakers say the gap between revenue and planned spending for next year actually may approach $200 million. Put it in perspective: That’s around $110 for every man, woman and child in West Virginia.

– Thoughtful legislators know what they’re doing. Tomblin and the vast majority of lawmakers want to increase pay for public school teachers. The last version of a bill on the subject, in the state Senate, would boost their pay by $837 a year, in addition to the regular “step” raises they already receive annually. Sen. Brooks McCabe, D-Kanawha, said the raises will be paid for with “borrowed money.”

– Why would McCabe say that? Because the raises, along with scores of millions of dollars in other state spending next year, can be funded only if legislators take money – as much as $200 million – from West Virginia’s “rainy day” fund. That account, built up during a period of several years, contains about $920 million. At this rate, by the time the son or daughter you send off to college this fall graduates, the rainy day fund will be empty. West Virginia will be flat broke.

– So, isn’t the rainy day fund there to be spent? Yes, but the original intent was to use the money only in case of short-term emergencies. Remember, items such as pay raises stay in the budget forever.

– Depleting the rainy day fund will be costly. One reason companies that rate the states’ credit worthiness like West Virginia is that $920 million socked aside for emergencies. Once it’s gone, our ratings will not be as high – and the state will pay higher interest rates on bonds sold for purposes such as new schools.

– Another comment by McCabe is very, very disturbing. Referring to official estimates the teacher pay raise will cost the state about $34 million a year, he told a reporter the amount “is really closer to $70 million or maybe even $100 million.” For many years during the 1960s and 1970s, state officials purposely underestimated the cost of programs such as public employee pensions. Are they at it again?

– Not to worry, say some officials. State government has only hit a temporary rough spot. After the next couple of years, revenue will rebound and everything will be all right. Really?

– Revenue from hundreds of sources pours into state coffers. Let’s look only at money from legalized gambling: During the current year, nearly $301 million in new money from the Lottery Commission was included in the budget. Remember, income from that source hasn’t matched expectations. Tomblin’s budget for next year projects about $9 million more from gambling. During the three subsequent years, estimates are for about $6 million a year more on top of that.

This is living in La-La Land, as we used to say of people who’d lost touch with reality.

McCabe, a realist, is leaving the Legislature. He may be departing just in time to avoid being buried not in a blizzard of white snow but a sea of red ink.

Myer can be reached at mmyer@