Nearly missed in all the political news of the last week was the monthly report by Governor Tomblin’s administration on the state’s finances. State Revenue Secretary Bob Kiss reported that September tax collections fell $32 million below estimates, putting the state $80 million behind on collections through the first quarter of the fiscal year.
“I can’t draw you a scenario by which I think we will meet the revenue estimates for the current year so we need to start taking some action,” Kiss said. That means the Tomblin administration must again contemplate ways to cut government spending.
Tomblin has already cut $400 million in spending over the last three years, primarily through across-the-board reductions, but he may be reaching the end of his rope on that approach. Instead, the Governor could be looking at more targeted reductions.
There is also the possibility that not all of the $85 million allocated from the Rainy Day Fund for flood recovery will have to be used for that purpose. The $85 million price tag is based on the state putting up 25 percent and the federal government paying 75 percent of the cost. However, West Virginia has asked for a 90-10 split, which would then free up some of that money for the budget.
Additionally, there were a couple of positive signs in the latest revenue figures. Coal severance tax collections, which have plummeted with the decline of coal, actually reached the projection of $26 million. Consumer Sales Tax collections were slightly above estimates and nine percent higher than last September.
That’s hardly robust, especially since Personal Income Tax and Corporate Net Income Tax collections were below expectations in September. Still, if our economy has found the bottom and we’re starting the ever-so-difficult road to recovery, West Virginia might be able to make it through the rest of the fiscal year without draconian cuts.
But that’s this year. The Tomblin administration is projecting a shortfall of $300 million for the next fiscal year budget beginning July 1, 2017. The new governor won’t take office until mid-January and the Legislature isn’t in session until a month later. However, they better get an early start because there are significant challenges ahead.