West Virginia Revenue Secretary Dave Hardy says the state could run a $500 million budget gap by the end of this fiscal year.

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Dave Hardy

The state’s general revenue budget is about $4.6 billion, so the amount Hardy is describing would be about 10 percent of that — a gaping hole in the final few months of the fiscal year.

Much of that, about $300 million, was caused by the state’s delayed income tax filing to July 15, after the current fiscal year ends.

The rest, an estimated $200 million, is the anticipated result of the severe economic slowdown caused by the coronavirus pandemic, pushing down personal income tax and consumer sales tax collections.

“That number has really got us concerned right now,” Hardy said today on MetroNews’ “Talkline.”

In the immediate sense, state officials are hoping for relief from the federal government.

West Virginia anticipates about $1.25 billion from a federal relief package passed by Congress and signed by the president.

That money initially was intended to apply directly to coronavirus response by states, but the National Governor’s Association last week asked for increased flexibility to apply the money to additional expenses.

The National Governor’s Association also asked for an additional $500 billion to cover state revenue losses.

West Virginia should know more about how the federal dollars may be used by the end of this week, Hardy said.

“Without knowing that, it’s impossible to determine our plan going forward,” Hardy said. “We should know that by the end of this week.”

Another option would be using the state’s Rainy Day funds, which would require legislative approval.

Mick Bates

“You have delayed income and lost income,” stated Delegate Mick Bates, D-Raleigh. “You can expect the feds to backfill some of this and provide broad discretion as to how the states can spend it, but I don’t see how you can avoid a special session to draw allocate it and also draw down Rainy Day to close the budget hole in 2020.”

Bates also expects difficult economic times ahead.

“Some of these jobs and businesses aren’t coming back,” he said. “The longer this goes on the more of them there will be.”

Mark Muchow

Hardy and Deputy Revenue Secretary Mark Muchow acknowledged serious, longer-term economic concerns.

“This is a crisis we’ve never witnessed in my lifetime,” Muchow said.

Hardy said current calculations anticipate the state largely being shut down through May.

After that, though, they anticipate continued economic difficulties into next year.

“We’re thinking of a partial return in June. Not all the way back up by any stretch,” Hardy said. “We still think we’re gonna be depressed in the first quarter of (fiscal) 2021.”

Muchow added, “Next year will also be affected negatively by this.”