“The West Virginia Department of Revenue today released numbers for the month of June, officially ending the fiscal year with a balanced budget.”
That statement from the West Virginia Department of Revenue issued last week was mundane—and accurate—and it also belied the seriousness of the state’s budget challenges.
Yes, state government did end the fiscal year June 30 with its books in order, but it was a heavy lift. The Tomblin administration and the Legislature had to scrape up $426 million throughout the year with cuts, account sweeps and borrowing from the Rainy Day Fund to make ends meet.
That followed revenue collections stunningly falling 10 percent below estimates because of the dumpster fire in energy industries, especially coal.
“Due to the unprecedented challenges in the energy markets, this was one of the most challenging budget years I have dealt with in my 42 years of public service,” said Tomblin.
Severance tax collections reached only $276 million, 43 percent lower than the amount collected the previous year. The trickle-down was felt in the rest of the economy. Personal income tax collections dropped 13 percent below the previous year and corporate net income tax collections declined 24 percent.
But even as the books were being closed out on last fiscal year, the state faces considerable fiscal uncertainty with the new budget. Lawmakers and the governor wrestled during a 17-day long special session before finally agreeing on a 2017 budget that was balanced on a $70 million draw down from the Rainy Day Fund and a $98 million tobacco tax increase.
“This revenue helps to address the issues with not only the fiscal year 2017 budget, but projected deficits in future years,” Tomblin said when he signed the budget last month. “However, it falls well short of eliminating projected deficits of hundreds of millions of dollars that elected officials will have to address in the future.”
That’s a not-so-subtle warning from the outgoing governor that whoever is next will face even greater budgetary hurdles.
Democratic gubernatorial candidate Jim Justice says he’ll solve the financial woes through dramatic economic growth. “You’re in for a rocket ship ride, as far as job creation, like you can’t believe,” he has predicted.
The Republican gubernatorial candidate, state Sen. Bill Cole, appears more focused on structural changes in how state government operates as he tries to make Charleston more effective and less expensive.
Whichever path is taken—depending upon the November election—will represent a significant challenge before a new administration will be able to issue the perfunctory, but necessary, declaration that the state will have ended the 2017 fiscal year with a balanced budget.