CHARLESTON, W.Va. — New procedures are in place for all state agencies regarding the use of the state’s $25 million line of credit.
The policy change, announced by Gov. Jim Justice on Monday, comes to ensure the line is used appropriately as well as in a transparent manner.
“We recently discovered that there hasn’t been any review or approval procedures for agencies to use the credit line,” Justice said Monday. “All future requests will be reviewed and approved only when they are fiscally responsible.”
The line of credit has been used since 1992 primarily by the Fleet Management Office to purchase vehicles.
State colleges and universities have used the line of credit to make purchases, including resurfacing fields.
Deputy Chief of Staff Ann Urling investigated the use of credit to understand the practice of using the line of credit.
“What the agencies were finding from a cash-flow standpoint instead of purchasing a $27,000 car and having to pay all that up front if they could do it over time, it would smooth out their cash flow,” she said.
“Using it for those purposes, that makes sense,” she added. “My question was who gave who the authority to do this and incur debt on behalf of the state? And was that handled properly?”
Urling said following communications with the state Attorney General’s Office and the Department of Administration, best practices needed to be put into place.
“I sent out a memo to inform everyone that any loan or extension of credit from a bank or a financial institution has to receive approval from the governor’s office,” she said. “Prior to a purchase that would need to be made on the credit line, the agency is to prepare a justification for the purchase as part of the governor’s office evaluation on if that is a prudent thing to do.”
The oversight is supposed to serve as a check over the use of the credit line.
The current balance of the line of credit is around $21 million, $17.6 million of which from fleet purchases. Bank of America finances the credit line at an average interest rate of 1.68 percent.