CHARLESTON, W.Va. — The new four percent state budget cut will mean several state agencies have had to cut their budgets by more than 20 percent during the last three years, state Revenue Secretary Bob Kiss said Tuesday.
The latest cut was announced Monday by Gov. Earl Ray Tomblin because of plummeting severance tax revenues that have missed projections by approximately $1 million a day during the past month.
Twenty percent in cuts in parts of three years is having an increased impact on the agencies, Kiss said.
“It’s going to be a close run game in terms of the delivery of services and programs in some of those agencies and also it’s going to be a struggle for them to continue to perform their mission,” Kiss said during a conference call with reporters.
The Tomblin administration is expecting to have to fill a $250 million revenue shortfall between now and next July. The four percent cut will result in $100 million. The rest will come from shifting around other revenue and a proposal to take money from the Rainy Day Fund, which would have to be approved by state lawmakers.
Agencies will be given flexibility in how they come up with the latest cuts, Kiss said.
“We’re not taking the approach that you literally got to go into every account and cut every account by four percent. If they can find a more creative way to do this we are certainly willing to work with them. It’s going to be tough for some of these agencies,” Kiss said.
Coal production is down and the price of coal is down. The commodity is also in significantly less demand on the export markets. The current slide in severance tax revenues will stop when production is in line with demand, state Deputy Revenue Secretary Mark Muchow said.
“The coal industry has taken major steps to curtail production. Down the road that will result in a rebound of the picture where prices will firm up a bit and the market will clear,” Muchow said.
Natural gas production is up 30 percent in West Virginia this year but there isn’t enough infrastructure in place to get the gas to the market and get a good price, according to Muchow.
“Until that pipeline infrastructure is brought up to speed– it’s behind the curve–we’ve got a lot of natural gas in West Virginia that doesn’t have much place to go,” Muchow said.
The governor has continued the state hiring freeze, cut out non-essential travel and canceled holiday parties.
Tomblin had hoped the state’s revenue picture would be in good enough shape this year to help funnel money toward other needs in next fiscal year’s budget. That will likely be difficult now.
“It (next year’s) will be an austere budget” Gov. Tomblin predicted Tuesday on MetroNews “Talkline.” “No one was able to see the sudden drop in the price of natural gas and not being able for the coal market to recover.”