CHARLESTON, W.Va. — Gov. Jim Justice says the state won’t have to use its Rainy Day Fund to close the funding gap for the current fiscal year.
State estimates show the state is $123 million short for the current fiscal year. Most of the focus at the state Capitol has been on determining a budget that would resolve an estimated half-billion dollar gap for the coming fiscal year.
Justice announced today on MetroNews “Talkline” that he is proposing to use about $60 million from special revenue accounts across state government and about $60 milion in reappropriated funds — unspent money from the past five years — to deal with the current gap.
“I’ve found there’s these accounts that there’s some money in them,” Justice said.
“I think there’s a way we can come really close, if not get there, to sweep these accounts that are just sitting there in lala land and not invade our Rainy Day Fund.”
The administration says there is reappropriated money in the governor’s office, the Legislature, the Offices of the Insurance Commissioner, and other agencies across state government.
The state’s credit rating has been downgraded in the past year by the big three credit ratings agencies — Standard & Poor’s, Fitch and, most recently, Moody’s — in part because of continued reliance on the Rainy Day Fund.
“This makes perfect business sense, and I’m not sure why it wasn’t done years ago. If we keep using Rainy Day money without a plan for the future, West Virginia’s bond rating will continue to deteriorate.”
The Republican leadership in the Legislature responded that it’s fine for the governor to use this source of money and that lawmakers have known about the funds for years but that it’s not been within their role to suck specific funding out of agencies in the executive branch.
Senate Finance Chairman Mike Hall said questions also have to be asked about the intended use of the money. Hall said he assumes the Justice administration has asked those questions.
“We’ve known this money is there. Any day I can pull up a report and see it,” said Hall, R-Putnam. “But what you don’t know is what it’s intended use may be down the road.
“It’s better for the administration to suggest these changes because in theory he knows the effects on these agencies when he takes money. An agency may be accumulating money in an account for some big expenditure that they know is coming down the road that’s appropriate.”
Following his announcement today, Justice recommends the Legislature use as little money as possible from the Rainy Day Fund to plug the budget hole for the coming fiscal year.
“Powerful people in positions of responsibility kept kicking the can down the road, and the budget they passed last year has left our state upside down by $123 million,” Justice stated in a news release.
House Finance Chairman Eric Nelson addressed the current fiscal gap on Thursday during a floor speech about the Legislature’s approach to the state’s budget woes. Nelson noted that the governor’s earlier plan to close the current gap with the Rainy Day Fund could again affect the state’s bond rating.
“The governor has proposed to fill our gap for ’17 by going to the Rainy Day Fund for $125 million,” Nelson, R-Kanawha, said Thursday. “That would put us very, very low. And talk about a rating downgrade. We’ll be subject to something.”
In his floor speech, Nelson said his committees already have been examining special revenue accounts and reappropriated funds for potential use to help with current state funding.
“We’re examining our special revenue accounts, which have excess cash balances, and our reappropriated dollars like never before. We’ve done that the last two years, and we’re doing that again this year. What will be done with these excess cash balances — the goal would be for those go to into replenish our Rainy Day Fund.”
Justice’s announcement laid blame on the Legislature for not identifying cash on hand to close the current gap — a claim Republican lawmakers were quick to refute.
“The Legislature has had years to sweep accounts and get handle on our budget. In six weeks, I’ve uncovered money to prevent another massive raid on the Rainy Day fund. On the campaign trail I promised I’d do a thorough top-to-bottom review of state government, and I’m doing it every day to fix this budget crisis.”
House Speaker Tim Armstead, R-Kanawha, thanked Gov. Jim Justice for “embracing House Republicans’ long-standing desire” to tap unused money in state agency accounts to close the state’s budget gap.
“The Republican caucus in the Legislature has been fighting for years to get the executive branch to use the cash they already have on hand to help solve the state’s budget problems instead of passing the buck on to our struggling taxpayers,” Armstead stated in response to the governor’s announcement.
Referring to the prior administration, Armstead continued, “This would have been done sooner had we not had significant pushback from agency bureaucrats and the Governor’s office.”
Armstead said that last year, the House passed bills to sweep more than $83 million from the then-$389 million in agency accounts to help close the budget, though those bills were either significantly pared down or did not become law.
Additional sweeps were proposed during the Special Session process, but the executive branch pushed back against those proposals, Armstead recalled, claiming the sweeps would cripple their ongoing operations. That was in the wake of then-Gov. Earl Ray Tomblin imposing across the board cuts for agencies, so some were using reserves for day-to-day operations.
“We in the Legislature are committed to getting government spending under control and honoring our constituents’ outcries to cut government waste,” Speaker Armstead stated. “Using money that’s already on hand is something this governor should have proposed before calling for the largest tax increase in the state’s history and asking to raid our Rainy Day Fund by $120 million. We welcome him to our way of thinking, even though he’s getting here a little late.”
Early Friday evening, Senate President Mitch Carmichael and Majority Leader Ryan Ferns put out their own statement in response to Justice.
“We appreciate that Governor Justice has embraced the previously announced Republican initiative that will utilize funds that are currently stashed away within the executive branch of government to balance this year’s budget.
“Today, the Governor made a claim that in just six weeks he’s ‘uncovered’ $120 million, as if these funds were hidden in a sock drawer. Nothing could be further from reality. In fact, this money isn’t hidden. There’s nothing secret about it. The very amounts of money in these accounts are under the Governor’s purview.
“Furthermore, these funds are publicly available on both the Governor’s Budget Office website and the Legislature’s website. Clearly, Governor Justice has discovered the resources that are at his disposal, and has wisely decided to utilize the information to make an informed decision about his budget proposal. For the Governor to suggest that he just prevented a raid on the Rainy Day Fund is simply wrong, particularly in light of the fact that the Governor’s introduced budget bill raids the Rainy Day Fund by more than $123 million.
“We look forward to working with Governor Justice his executive agencies to craft a meaningful solution to our state’s budget crisis. The use of one-time money is a slippery slope, and the Legislature is focused on addressing the structural deficiencies in this budget rather than add another layer of one-time patches to simply survive another year.”