Governor Tomblin’s speech Wednesday night was rather short, as State of the State speeches go. One of the reasons may have been that beyond education reform and prison overcrowding, the Governor didn’t have much new to talk about.
That’s because things like pay raises for school teachers and public employees or new programs cost money, and West Virginia simply doesn’t have any extra right now.
Unlike the federal government, West Virginia can’t print money or run a budget deficit. The budget must be balanced. That is more challenging for next fiscal year because of growing Medicaid costs and increases necessary to keep the state’s retirement programs actuarially sound.
To accomplish that, Tomblin cut spending in some state agencies by 7.5 percent (he excluded Medicaid, public education, the State Police and mine safety) and rounded up one-time monies of $275 million in surplus funds from various accounts to balance the budget.
But the biggest problem is that the state’s economy just isn’t growing right now.
The state Department of Revenue projects a drop of three-tenths of one percent in employment this year, before it starts to trend upward again in 2014.
The decline in the coal industry accounts for most of the problem. A report by the WVU College of Business and Economics shows that employment in the mining sector fell by 5,900 people between January and August last year.
There were modest employment gains in other sectors, such as health care and construction, but those jobs typically don’t pay as much. As a result, the state’s tax collections have flat-lined at $4.1 billion.
Historically, West Virginia could count on steady increases in gambling profits to prop up the budget. However, increased competition from surrounding states has cut into sales. Gambling revenues have peaked and are now declining.
In 2013, state government took in $410 million in gambling revenue. For next fiscal year, that is projected to drop to $365 million.
There is some good news.
West Virginia has $914 million in the Rainy Day account. That money, set aside for an emergency, helps prop up the state’s credit rating and keep down debt service costs on borrowed money.
Tomblin, and before him Joe Manchin, resisted the temptation to dip into the Rainy Day fund. West Virginia needs to maintain that discipline going forward.
What West Virginia really needs is economic growth. Unfortunately, the long term future of the coal industry is uncertain. The regulatory environment and competition from natural gas mean the domestic market for coal may continue to decline.
Republican lawmakers want to eliminate the taxes businesses pay on inventory, machinery and equipment. They rightly say that every time the state puts together an incentive package to try to lure a business it includes a break on the inventory tax, so why not give every business that benefit.
It’s a valid argument, but Tomblin doesn’t want to give up that revenue when the budget is so tight. Republicans will have to wait until they hold the Governor’s office or have a majority in one of the two chambers to push that through.
In the meantime, the belt tightens a little bit more.
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Comments
TD
Coal is up, coal is down, can't always be counted on. Sure we need economic growth but the real robber of the treasury is the health care industry. EVERY PROBLEM in this country can be fixed if we reign in the cost of healthcare. I heard a couple days ago that RUBY was asking for an 8% increase again this year! How long can this go on??? How long do we pay twice what the rest of the world is paying for healthcare?
We go on nibbling at the edges, agnst, drama over budgets but the real problem is never dealt with. One quick example, my elderly neighbor is on an oxygen machine at night provided by PEIA and Medicare. She has had the machine now for 4 years, she told me the other day that the two providers were paying $1,000 each month for the macchine and oxygen. That is insane, if she is fortunate enough to live another 5 years we will have over $100,000 in an oxygen machine. Go up and down the block, see how many there are and then you may understand why everybody but the healthcare industry is being squeezed to death but nothing EVER gets changed.
There, my morning rant is over. You should write about healthcare constantly just like you have education.
February 15, 2013 at 6:53 am | Report comment
CaptainQ
I agree with you 100% here, TD. The sad thing is, ObamaCare is, as you say, 'nibbling on the edges' of the problem. The ONLY true way to reign in the vicious health care cost 'circle' of hospitals/doctors-insurance-malpractice is for a complete 100% government takeover of the industry. This of course, will NEVER happen since few in Washington have the guts to stand up to the big corporations (insurance, health care, etc) involved in this. Sure it would lead to health care rationing, but it's the only sure way to contain costs. If something isn't done soon to curb these costs, only the wealthy will be able to afford quality health care as Medicare, Medicaid and ObamaCare will collapse under the weight of skyrocketing costs.
February 15, 2013 at 8:48 am | Report comment
Shadow
How about giving me the name of some government program that is properly run? Like the Post Office, Social Security, Medicare, Education, etc!
February 15, 2013 at 1:03 pm | Report comment
Hop'sHip
TD: You are going to see healthcare providers "squeezed", and it is going to be by Medicare and the provisions already written into what people here like to call "Obamacare". It represents a sea change on how hospitals will be reimbursed the likes of which we haven't seen since the adoption of the prospective payment system impacted how we reimbursed for inpatient care. And just like we saw with the PPS, commercial insurers will quickly adopt the Medicare payment methodology. This will result in considerable blowback because it will lead to a lot of small hospitals closing their doors or reducing their services, but it is coming.
By the way, rate increases in West Virginia are set by the state Health Care Authority and you can go to their web site and see what each hospital has been allowed for the coming fiscal year.
http://www.hca.wv.gov/ratereview/Documents/Benchmark%20Ranking/Benchmark%20Rankings%202012.pdf
February 15, 2013 at 8:51 am | Report comment
Medicare Biller
Another point....
Hospitals are reducing services not only because of Medicare's reduced reimbursement, but because of the astronomical amount of Liability Insurance a physician/hospital has to carry to protect themselves from lawsuits. A fee that ultimately gets passed on to the patient. It's time to address ALL issues with health care and that includes liability insurance and the role of attorneys.
February 15, 2013 at 10:11 am | Report comment
GregG
Maybe the doctors/hospitals should address their negligence issues. Stop killing and maiming patients and maybe they wouldn't be faced with lawsuits. And don't try telling me that this doesn't happen. I have lost one family member and one neighbor due to negligence. And I also have an ex wife that was permanently effected by negligence. And none of these three took legal actions, although they should have. Yes, I know there are frivolous lawsuits taken against doctors/hospitals , but I know damn well there are plenty of cases where individuals should have taken legal action but didn't.
February 15, 2013 at 10:35 am | Report comment
Shadow
If I had that kind of luck, I would never see a Dr, again or enter a hospital again. Trust on providence.
February 15, 2013 at 1:06 pm |
TD
agreed medical biller but that's a small fraction of the problem and a right wing talking point. How about the fact that Republicans put into law that the Fed Gov. can't negotiate with pharmaceutical companies???
The 10 nations closest to ours in standard of living have an average cost of $3,450 per citizen annually (France on the high end at $3,600 and England on the low at $3,200). Our cost is $7,100 per citizen and guess what, those 10 nations have a combined life expenctancy of almost a year longer than us.
Every state budget, county budget, business budget struggles to survive this high cost. It cannot continue!
February 15, 2013 at 10:49 am | Report comment
Medical Biller
Healthcare and ALL it's issues is a massive undertaking and vilifying each other when there is a difference of opinion doesn't do any good.
Just because you don't agree with my views, doesn't make me a right wing talking pointer. I'm proud of my political stance and won't apologize for my view on the healthcare issue.
Or someone that thinks you shouldn't seek legal council if you've been truly harmed under a physicians medical care. That's a no brainer, they should have.
This country as a whole has a real problem with this type of behavior and mentality and it's dividing our great nation. We need to start working together for the sake of future generations. All and all, I believe that we're striving for the same end result. Better and more affordable healthcare for all Americans.
So the next time you want to spit your venom at someone that may see things a little differently than you do....count to 10, take a deep breath and breathe before launching your verbal attack.
February 15, 2013 at 11:51 am |
Medicare Biller
I work with Medicare and PEIA and I can guarantee you that Medicare and PEIA are NOT paying $1000.00 rent on this equipment at the SAME time.
But....if by some chance it is true, it needs to be reported to Medicare and PEIA because that is called "FRAUD" and it is a crime.
Like I stated, I seriously doubt both insurances are paying the same amount at the same time for the same service. Purchasing equipment prescribed by a physician is an option and would save a great deal of money for all involved including Medicare and PEIA.
February 15, 2013 at 9:47 am | Report comment
TD
no the combined payment is $1,000 for something that should cost no more than $100!!!!!
February 15, 2013 at 10:50 am | Report comment
TD
that's a great idea and so obvious, same with scooters and wheel chairs, same with opening a gov't run cadarac or knee replacement center. All of these things we are paying 10 times what we should
February 15, 2013 at 10:52 am | Report comment
GregG
I think he was saying the total cost was $1000.00 per month. And I would have to agree, that is beyond ridiculous regardless of who is paying the bill.
February 15, 2013 at 11:06 am | Report comment
Chuck
I agree also.
February 17, 2013 at 11:16 am | Report comment
GregG
TD, I agree. I think everyone can relate on a personal level to being screwed over by hospitals, doctors and big pharma. But many refuse to stand up to Big Business because they view them as a God. Be it the medical industry or Big Oil, to many people view them as "job creators" and turn a blind eye to the impact of their greed on this country and it's economy. Just note in Hoppy's commentary the line " Republican lawmakers want to eliminate the taxes businesses pay on inventory, machinery and equipment." Well here is how ol' Greg views that idea. Let's come up with some kind of system where a business is given tax breaks based on their positive impact of the economy. Base these tax breaks on the number of employees, wages paid to employees, benefits provided employees etc...... For example, you have two businesses producing car parts and both are basically producing the same volume, Company A employs 300 people and pays them a wage of $18.00 per hour and provides them with full medical insurance, a retirement plan and other incentives such as profit sharing, safety bonuses etc..... Company B employs 220 workers at a wage of $10.00 per hour, requires them to pay 50% of there medical insurance and offers no other incentives. Now tell me, which company is providing the greater impact on our economy? In my opinion Company A would be receiving tax breaks on their inventory, machinery, equipment and any other tax break I could award them. Company B? Well I would tax them out of business. Until someone grows a set and stops treating Big Business as God and rewarding them for their endless greed this economy is never going to be turned around. So now let the eye rolling and there goes Greg again with his greed rant begin.
February 15, 2013 at 9:52 am | Report comment
TBone Porterhouse
Big Pharma. Big Business. Big Oil.
What about Big Government??? That is the worst evil of anything Big. Besides Big Obama. That is the evilest of the evil.
February 15, 2013 at 12:20 pm | Report comment
jethro
the health care industry big oil and pharma
industries create a lot of well paying jobs.
take those away and see where your economy goes.
February 15, 2013 at 1:00 pm | Report comment
Lulu
Very well said, TD.
February 16, 2013 at 12:06 pm | Report comment
CaptainQ
What's that Hoppy? The WV economy is on the decline? Forgive me, but that's not exactly news. This state will ALWAYS be an economic 'basket case' because of its corporate taxation, poor education system, high cost of health/vehicle insurance as well as the incompetance of the state government in Charleston. If it wasn't for our natural resources (coal, natural gas, Marcelius Shale, etc) this state would have EVEN less going for it. It amused me to see that on a percentage of population scale, West Virginia ranks third in the nation in residents leaving (according to Yahoo). This is no surprise, seems more people want to LEAVE this state than want to migrate here (except for the illegal immigrants). And the Obama Administration's "War on Coal" isn't helping us either.
Oh well, at least the Democratic JUNTA that's been running this state for eons likes the situation here, they're certainly not even trying to do anything about it.
February 15, 2013 at 9:09 am | Report comment
WV Citizen
Captain Q
Look at the propose bills in our House/Senate that want to give tax breaks for our retiring law enforcement officers. Currently firefighters and federal workers recieve a $2000. deduction or modification to their income but some of the proposals are want law enforcement not to pay any state income tax. Go figure!!!
February 15, 2013 at 3:27 pm | Report comment
wirerowe
Hops for as long as I can remember people have been talking about reining in Health care providers. I am encouraged by your statements that the Affordable Health Care Act will clamp down on hospitals costs. What provisions in the act are different from the way things are done today and make reining in health care costs or at least slowing the rate of growth likely?
February 15, 2013 at 9:10 am | Report comment
Hop'sHip
Here is the Kaiser Family Foundation summary of the provisions included in the legislation. Scroll down to cost containment portion.
http://www.kff.org/healthreform/upload/8061.pdf
February 15, 2013 at 10:37 am | Report comment
wirerowe
Thanks. My eyes glazed over , The bill is very complex and requires a very good understanding of the insurance industry which I don't have but I trust that you are right . I will continue to study and learn about this aspect of the bill. Anything that can maintain service levels while cutting cost or reducing the growth rate of costs is a positive.
February 15, 2013 at 11:02 am | Report comment
TBone Porterhouse
We had a governor with extensive business experience, especially in coal, and we then turn the State's economy over to a career democratic liberal politician. What would you expect???? Everywhere you see economic despair you see it being led for decades by the liberal democratic political machine. The mostly BLUE states. Everywhere you see economic vitality, you see those States being led by conservative Republican governors. The mostly RED states. The liberal "Tax and Spend" mantra is an economic killer. Even Stevie Wonder and Ray Charles could see that.
February 15, 2013 at 9:27 am | Report comment
Hop'sHip
How do you measure "economic vitality", TBone? By the number of bills they pass restricting abortions? Here is the list of states ranked by GDP growth over the last couple of years for which we have information, and those on the bottom of the list seem to be all red. Look who is number 3 for 2011! West, by God Virginia!
http://www.statisticbrain.com/state-economic-growth-statistics/
February 15, 2013 at 12:03 pm | Report comment
TBone Porterhouse
You are delusional. Those stats are for 2010 and 2011, when WV had a CONSERVATIVE democrat as Governor, not the liberal ERT. Four of the top 5 states are energy (fossil fuel at that)producing RED states. North Dakota, WV, Texas, and Alaska. Thank you for helping me prove my point. Texas, Alaska and ND are states that are about as Red as you can get. Thank God (something that repulses you)for the tar sands oil, natural gas, and coal.
February 15, 2013 at 12:32 pm | Report comment
Hop'sHip
Well help me out here, TBone. You were selective in what you pulled from those statistics, ignoring those states on the bottom who are as red as those you chose to acknowledge. But I assume anyone who associates himself with only the finest cuts must be on to something. Could you tell me the "liberal" policies ERT has pursued since assuming office? If not, we will have to start calling you "Pink Slime".
February 15, 2013 at 12:50 pm | Report comment
hillboy
Tbone, I'm really curious about what your basis is for calling ERT a liberal.
February 15, 2013 at 1:15 pm | Report comment
TBone Porterhouse
34 year career democratic politician who has never held a real job, other than running illegal poker machines. From Logan County. Pro labor union. If it walks like a liberal and quacks like a liberal, it must be a liberal.
February 15, 2013 at 4:51 pm |
mntnman
Yeah, you're right -- its just liberals -- conservatives have no blame. They have all the answers. They are the smartest. Why in the world would we ever elect anyone who believes what liberals believe.
Since our country has seen such huge success from the eight years of Bush and conservative control, we certainly need to emulate that.
Reagan is rolling over in his grave -- he was a true conservative, who understood the purpose and value of government. Those who call his name but do things he would never do (modern conservatives and tea party types) either forgot who he was, or never really knew.
February 15, 2013 at 12:30 pm | Report comment
mntnman
What we have here is failure to communicate...that education makes a difference. Companies avoid WV primarily because our work force is undereducated and under-trained. Simple really.
We have failed to prepare our children for the economy of tomorrow, taking the easy path and focusing on natural resources instead of the information and technology economy. Our public officials over the past two decades have ridden the coal train as far as they could, without doing the other things necessary for our economy to grow. Oh, they have driven the tourist economy, which provides poor paying jobs with no benefits. How is that working for us?
Otherwise, they have failed to address the one thing that can fix our problem -- education. Hopefully this time around we won't just tinker around the edges but will act boldly to really make a difference. Perhaps not, but we can hope. Educate our children -- fix our economy. Overly simplistic? Perhaps, but its a start.
February 15, 2013 at 12:26 pm | Report comment
TBone Porterhouse
The Economy of tomorrow?? Is that Obama's "New Normal" Economy of 7.9% monthly unemployment??? WV spend more money per pupil than any other state. And what has that gotten us?? Student achievement rankings of 43-47. And the GREEDY teachers unions always have their hand out for a raise. Maybe if we required students to be in school for more than 180 days a year. That is less than 50% of the days in a year. Maybe is we de-emphasized some of the extra-cirricular activities, students would have more time for the books. Swimming a sanctioned sport in WV ?????????? Really?? Soccer?? Do we really need to sanction Football for Foreigners?? Cross-Country?? Tennis?? Golf? Do we really need to sanction these country club sports for high school?? Schools are learning centers, not social centers and day care centers. Once we rid the scholl system of the liberal agenda maybe we can get our schools back to being learning centers instead of one big day care center.
February 15, 2013 at 12:49 pm | Report comment
Shadow
The real problem is that the folks with ambition, the achievers, have been leaving WV for over 70 years. What have you got left?
February 15, 2013 at 1:12 pm | Report comment
Hop'sHip
You?
February 15, 2013 at 4:04 pm | Report comment
GregG
I wonder what the weather is like in Holmes County, Mississippi, don't you Hop'sHip?
February 15, 2013 at 4:22 pm | Report comment
SHADOW
I left when I read the Tea Leaves that unless you inherit land, connections, or money, you don't have a chance in WV. Never regretted it. There is a big World out there with jobs and advancement.
February 18, 2013 at 6:54 pm | Report comment
SHADOW
I forgot to add that they took most of the pretty girls with them....
February 17, 2013 at 12:19 pm | Report comment
scott
employers don't have a chance here. the business environment is terrible between liability rates, comp rates and finding qualified, dependable employees. most folks in this state with gov't assitance have no incentive to get a job and many aren't qualified due to the education system geared towards shoving every kid to college. i agree with all the above posters that our education system needs a serious change.
February 19, 2013 at 9:48 am | Report comment
John
What economy? 19th century fuel sources, Walmarts, and Fast Food Restaurants?
February 20, 2013 at 7:43 pm | Report comment
Randy
Let's get real people. You really think obama care is going to rein in anything? Think about it. The CBO says the cost for a policy from the health care exchange for a family of 4 will be about $20.000.00 a year. How many of your friends do you know that have that kind of extra cash to spend on mandated health care? I don't know of any. So they pay a $2400.00 penalty. Do this now nation wide. Biggest tax increase in the history of this country and that's all it is. Now this states econemy. We had a booming logging industry untill Gov. M raised the excise tax and killed it. Our corperate tax rates are so high buisness build over the state line to do buisness here. The inventory tax is a double, tripple tax. Taxed when purchased. Taxed in inventory and then taxed when sold. It's just wrong. Income tax rate is nuts. I've lived in a hand full of other states and this is the worst. In other states if you are getting a Federal return you will get something back from the state too. Not here in good ole WV. Unless you pay extra all year like I do to compensate for it. Why do people leave here? All this and then it's an at will state where the only protections workers have is what the Fed mandates. We have one of the highest road tax's in the country and yet, rate near the bottom of the list on road quality with the vast majority barely even being a single lane. All this and boy o boy we absolutly couldn't survive without 21 million in routers for the schools where the most important ones going there are not the students but rather, the teachers. Bottom line, yeah, the Liberal Dems run a great ship and their doing it all for your betterment. Yeah, right.
February 20, 2013 at 11:29 pm | Report comment