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11/02/2009

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Hoppy's Commentary

Talkline Host Hoppy Kercheval

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A Last Resort

Recession Deepens in WV

The national news is filled with proclamations that the recession is over. The optimistic presumption is based on the figures released last week showing that the economy grew at an annualized rate of 3.5 percent in the third quarter.

The Wall Street Journal said the numbers signaled “an apparent end to the worst recession since World War II.”

But when it comes to West Virginia’s economy, we have to quote ESPN commentator Lee Corso: “Not so fast my friend.”

State tax collection figures released by Gov. Manchin’s office Monday showed that West Virginia’s economy continues to contract.

“Some (national) folks have declared us out of the recession, but on the state revenue front things are still pretty bleak at the present time,” state Deputy Revenue Secretary Mark Muchow told Metronews.

Severance taxes, which come primarily from the coal industry, are down a whopping 35 percent from where they were this time last year. Personal income taxes and sales tax collections also continue to decline.

That’s not all.

Muchow said lottery revenues are down and the state Road Fund is suffering because dealers are selling fewer vehicles and less gasoline is being sold—both of which contribute tax revenue to highways.

Meanwhile, Workforce West Virginia reports the state’s seasonally adjusted unemployment rate in September was 8.9 percent. The agency says West Virginia has lost over 35,000 jobs so far this year and now has 64,200 workers who are unemployed.

Muchow says October’s slump means West Virginia faces a projected $100 million shortfall this budget year. By law, the state cannot end the fiscal year (June 30, 2010) with a deficit so the Manchin Administration and the Legislature will have to take action.

The options include forcing state agencies to reduce their budgets the rest of the year, freezing spending and hiring, furloughs and layoffs and/or dipping in to the Rainy Day Fund.

During the more prosperous years of Manchin’s first term the Governor poured money into the savings account. As a result, the state now has about $500 million in the fund. State leaders could decide to finally dip into that account to make up for the shortfall.

There is also the possibility that money from the federal economic stimulus package can be used to help West Virginia balance its budget.

Fortunately, Manchin’s frugality over the last five years has West Virginia in a better position than most states to deal with the continued downturn. Had Manchin opted for more politically popular spending during his first term, the state would face far more painful decisions than it does now.

The budget news delivered by the Administration was not good. The rest of this fiscal year is going to be tight. Hopefully, the national recovery will be strong enough that the pace of West Virginia’s economy will quicken, but that may be wishful thinking.

Some economists are predicting a slow and painful national recovery. If that’s the case, West Virginia’s economic news could get worse before it gets better.

User Comments

Well Machin was panting to get Obama in the White House.Now all the little people have to pay the price. Will we ever learn how to vote, probably not.

There is no growth, the GDP is a joke that is a false number. Once the fourth quarter results come out, there will be a decline in the GDP. The cash for clunkers spurred spending and helped raise it, but there is no more cash for clunkers.

Tax cuts is the key, there is a reason the government is looking to extend the 8000 first time home buyer credit.

The truth is that any Economics student can point out the "growth" driver in this "recovery"....but first, an Econ 101 lesson. There are three components of a modern economy; Consumerism, Investments and Government. All three play a role....usually Government "takes" money out of the Economy by taxation, and when the money supply is weakened, there is static growth or negative activity-a recession, if you will. When all segments of the GDP are examined, it truly is CRYSTAL clear that the "driver" here is the short-term effect Government spending has on GDP. THERE WAS ZERO GROWTH IN THE PRIVATE SECTOR--IN FACT, MORE JOBS WERE LOST(which makes you laugh at the stimulus claim of "saved" jobs). The truly dangerous fact is since the Government spend is behind the "expansion" of GDP......gosh....where does that money come from? Obama's stash? A resounding NO, dear reader....it comes from us, or OUT of Investments and Consumerism, in the form of some sort of taxation, thus NOT AVAILABLE for GDP expansion. It doesn't matter if you are a UNION member, a BUSINESSMAN, an INVESTOR.....it WILL come out of your pocket - and if China comes knocking asking for notes due.....this economy will be a repeat of Germany ca. 1900. STOP all future entitlements now - OBAMACARE must NOT pass - it WILL wreck the economy. Better yet....do the math, get some graph paper and map it out for yourself.....math does NOT lie.

Boy if we could just get this government off of our backs, then we'd have it made. We need to deregulate Wall Street and allow the free market to prosper. We need to change our trade laws so the corporations can go find cheaper labor, to hell with these unions. We need to set up things like 401K plans, have individuals invest in the market and advsie them to leave their money there, it will be just fine when you're ready to retire, (meanwhile allow schemes like "credit default swaps" and "hedge funds") so the well positioned can steal billions and billions while contributing nothing. We need to cut taxes on the wealthy so they don't have to burden themselves too much and who cares if the deficit goes through the stratosphere? We need to be the only country in the industrialized world without a universal healthcare system, afterall profits are more important than our citizens health. Meanwhile we get to pay twice as much as anyone else in the world for healthcare. These are just a few of the idealogical theories we have bought from the conservative economic mindset that has governed this country since 1980. Amazingly, many of you just want more of the same and it appears Obama has surrounded himself with enough like minded people he isn't willing to be FDR and turn the country in a new direction.

I have heard it said before that due to the size and scale of the US budget, it really takes about 12 years to realize the actual effects of something. That would take us back to about 1997 being the start of things that triggered the current recession... the Clinton administration. Several people are still blaming the subprime mortgage meltdown on him ordering relaxation of lending standards back then to people who could not afford them. So its going to be several years before we really know where the Obama direction lands us. We all know what will happen in WV if the coal industry goes belly up. Washington DC has always viewed WV as a bunch of expendable hillbilly hicks (and this is why there were so many of us drafted for WWII) and they will never see us as being able to help their political careers.. we are too small to make any difference in votes. And then, we have our own elected representatives in DC who sit back and do whatever pleases the upper echelons, knowing they will get reelected no matter what. Perhaps if there wasn't any coal sent to any power plants in the grid feeding the Capitol for awhile they might get a better picture...

Just because the Fed declares the recession over, doesn't make it so. Here are some facts that all of need to consider:

The real unemployment rate is approximately 17% nationally. That includes people whose unemployment benfits have run out, people who have quit looking, people who are underemployed, along with those who have lost hteir employment over the last 6 months. Two thirds of the US economy is dependant on consumer spending. With 17% of the work force out of work that equates to 17% of consumers who are not spending or have lessened their spending.

Then put on top of that one other simple fact. That fact is the government on all levels is taking more one's earned income. That removes even more ability of the consumers to spend.

The fact is the recession is along ways from over. The scary part is the Obama adminsitration and the leftists in congress can't seem to grasp the basic fact that you can't spend or tax your way out of this mess.

The samething is true right here in West Virginia. Mr. Manchin may have done a nice job of being frugal with the State Budget, but he and the legislature have not been friendly to business, nor have they been a friend of the taxpayer. In fact, they have driven business from this state with over regulation, a tort system that is used like the lottery, and a draconian tax system.

The situation we find ourselves today will not end until we make a number of changes. First and foremost amoung those changes is to remove the present group of politicans and replace them with people that are more concerned about the next generation and not the next election. Additionally, we need people in office that both respect and cherish the free market system. Alot of the reason we are where we are today is the result of politicans who have tried to create a socialistic utopia, when time and again we have seen socialistic and totalitarian governments fail.

One last thing we need to do is grow up and act like adutls. We need to remember that we are responsibile for ourselves and that government can't and never should be thought of as a means to success. We need to remember that politicans are not gods or royality, they are men and women just like us and we should hold them accountible instead of worshipping at their feet.

Hoppy,

West Virginia's chickens, its dependence on gambling as a revenue stream, are coming home to roost. The recession has halted all but the wealthiest or the most desperate or addicted from gambling. Surrounding States are jumping on the gambling bandwagon which will diminish gambling revenue even further in the future. With mountain top removal mining about to be shut down, and anyone who doesn't think that is the intent is foolish, the West Virginia budget and economy is heading for bottom.

Hoppy, This is more evidence that obama is still P O'd that he did not win in WV. He'll start with the coal industry, then the timber industry and then the natural gas industry and after he shuts them all down he will sit back with that smirk on his face and say how we don't know how to play his Chicago politics. I say the heck with him and his entire staff. He better work quickly because he is a one-termer. I just hope his term is over before he completely destroys our entire nation. GOD BLESS AMERICA!!!

Another 'spot on' commentary, Hoppy! To his credit, Governor Manchin has been great fiscally for the state. Had he spent money wildly (like previous Governors) the state would be in even MORE trouble now. Thank God he held the line on pay raises!

This was inevitable. With the many plant closings, the closure of many new car dealerships statewide and a soft coal market, it was bound to impact WV tax collections sooner or later. This means tough choices ahead, because with the Obama Administration's "War on Coal" in full swing, state tax revenue will continue to drop. This means either (a) budget cuts OR (b) tax hikes/new taxes. My guess is Mojo will want budget cuts while the Democrat lawmakers in Charleston will opt for raising and creating taxes to make up the gap. The prospect of new tax systems scares me because God knows what they'll 'create' this time! Remember the infamous "tree tax" and "dog tax" of the 80's? There's already been talk of an expanded soft drink tax and a new snack tax too. What next? How about a 'rock tax' for every stone on the real estate you own? Maybe a 'restaurant tax' on all food consumed away from home? Why not add a 'dish tax' for every satellite dish you have in your yard? Trust me folks, lawmakers are at their creative best when it comes to 'creating' new taxes out of thin air. Oops, maybe they'll be a tax on 'thin air' too!

Hang on to your wallets, folks! Our state government's coming after it!

Just one point. We have not borrowed more money in the last nine months than the 40 before. Its all about facts...Oh, and the former administration had 8 years to get things where they are -- this one has had only 10 months. I dont agree with alot of what they are doing, but lets get real...they didn't create the hole we're in...but they have to dig us out.

Now let the EPA shut down the 40 percent of West Virginia's coal production attributable to Mountaintop Removal and Cap and Trade Legislation eliminate much of the rest over time.

Then this fiscal year will look REALLY GOOD!

Hmmm ...

Hope and change seems to be having an impact on West Virginia.

Gee I cant understand these job losses.I thought that this administration was about job creation.They are about taking jobs away and has always been.They are all about higher taxes less jobs to pay them.You know you would think after all these years of promises we would vote different in WVa.We have the Natural resourses to do so but they like China better then us.But thats ok we can all gamble our way out.We can thrown dollars up in the air and get coal and oil and taxes for schools and roads o what a dream.Our leaders better wake up while they even have jobs.We have borrowed more money in the last 9 months then we have in the last 40 years there is something wrong with that picture.If you think there isnt then maybe your reading and seeing what i am not..

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