CHARLESTON, W.Va. — West Virginia officials are still deciding whether a proposed $100 million cut to the state budget is necessary.
“There is no definite plan on any kind of budget cut,” Revenue Secretary Dave Hardy told lawmakers during interim legislative meetings on Monday.
As tax collections came in below estimates for the first couple of months of the fiscal year, state leaders started talking about a precaution of a $100 million cut.
The proposed cut would be a small slice of the $4.7 billion General Fund, but it would still require mid-year adjustments by state agencies.
“Turning the state’s budget is like turning an aircraft carrier or a large ship,” Hardy said. “You have to go slow.”
Over the first four months of the year, state collections were $33 million below estimate.
For the month of October, collections were only $3 million below estimate.
And November’s collections may be deceptively low because, with the Thanksgiving holiday, state employees won’t be around to register what comes in.
“They will look bad compared to last year because we’re missing that last day of the month,” said Deputy Revenue Secretary Mark Muchow.
So it might be the end of December, roughly halfway through the fiscal year, before it’s clear whether cuts would be necessary.
“Let’s wait to look through December to see where we are,” Muchow said.
Major factors for collections have been coal and natural gas markets, Muchow said.
Metallurgical coal, which had been a strong point, has seen an exports downturn because of soft international economies, Muchow said.
“Overall, the global economy has slowed down and there’s excess steel. So if there’s excess steel, there’s less need for metallurgical coal for steel markets,” Muchow said. “There’s more volume out there than there is demand for it.”
And natural gas production has been strong, but that has resulted in low prices, he said.
Finally, natural gas pipeline construction has slowed because of court challenges and because seasonal work is slowing down for winter months, Muchow said.
Delegate Daniel Linville, R-Cabell, asked if natural gas markets might pick up once the major pipeline projects are completed.
“That can only have a positive effect on the price of natural gas,” Muchow replied.
Only a couple of months before the start of the next regular legislative session, some lawmakers wanted to know if cuts are being anticipated for the coming fiscal year, not just the current one.
Delegate Vernon Criss, vice chairman of the House Finance Committee, asked about that.
“As far as next year’s budget, I don’t think we’ve gotten to the point of reaching a conclusion,” Hardy said.
“So you’re leaving yourselves an out basically, right,” responded Criss, R-Wood. “Because we just don’t know yet.”