Tomblin State of the State: “Budget challenges unseen in more than a generation”

CHARLESTON, W.Va. — Gov. Earl Ray Tomblin delivered his final State of the State address Wednesday night putting the best face on his austere plan for West Virginia as the state faces its toughest financial challenges in several decades.

“All of us in this chamber tonight and those watching and listening across the state know we are experiencing budget challenges unseen in more than a generation,” Tomblin said.

The governor has had to cobble together a series of tax increases, spending cuts and borrowing from the state’s Rainy Day emergency fund to offset the drop in tax collections due primarily to the decline of the coal industry.

MORE Read text of speech here

One part of his tax plan hits tobacco users. His proposal would raise the tax on each pack of cigarettes from .55 cents to $1.00. The tax on various other tobacco products would rise from seven percent to 12 percent. The plan also includes a first-ever tax on e-cigarettes. Those taxes would raise $72 million in new revenue annually.

One of the loudest ovations for the governor came when he said the tobacco tax increase would help offset an unpopular increase in PEIA out-of-pocket costs.  “Public employees will not see the dramatic benefit reductions initially proposed for the coming year,” Tomblin said.

The governor also proposes a new six percent sales tax on voice and data telecommunications services that would raise another $60 million annually.  Tomblin said this tax puts West Virginia “in step with what is done in the vast majority of other states.”

Tomblin proposes imposing both of those taxes April 1st to raise revenue quickly to help offset this fiscal year’s budget deficit. The state faces a budget shortfall of $354 million this fiscal year and more than $460 million next fiscal year.

But Tomblin said despite the challenges, “we are paying not only our current bills, but keeping every financial commitment of the past, paying down our debts in workers’ compensation, teachers’ retirement and public employees’ retirement.”

The state’s budget woes are directly linked to coal’s rapid decline in the energy market share because of competition from natural gas and tough regulations from the EPA. “Forces beyond our control have severely damaged our coal industry, and even the most optimistic among us realize it is unlikely coal will ever reach production levels of the past.”

West Virginia is in the middle of an intense debate over public education standards and the Governor called for all parties to put students first. “Over the past year, the delivery of public education in West Virginia has been used as a political football by members of both parties. It’s disappointing. It’s unacceptable. And it’s a disservice to our kids.”

The governor used most of his speech, however, to tout some of the more encouraging news of the previous year, such as the ground breaking for the huge Procter & Gamble manufacturing facility in Martinsburg, and he announced an expansion of the Addivant plastics plant.

He also called attention to progress in workforce training, combating substance abuse and juvenile justice.


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