CHARLESTON, W.Va. — The calculations for a possible West Virginia budget framework include an “economic growth” line item amounting to a few hundred million dollars a year.
The economic growth number comes in part from the activity Gov. Jim Justice believes West Virginia will see from his proposal to spend $2.8 billion on highway and bridge projects.
The line item is present over a period of fiscal years depicted on a new revenue proposal handed out to legislative leaders this week.
It amounts to $100 million for the coming fiscal year, $214 million each for fiscal years 2019 and 2020 and $244 million for 2021 and 2022. For a general revenue budget of a little more than $4 billion, that would be in the ballpark of 5 percent growth, a seemingly ambitious achievement.
Those numbers are added to a general revenue projection for each year, just like other, traditional income sources such as excess lottery funds.
Doing so and then subtracting the expected expenditures shows an estimated $15 million surplus for fiscal year 2018 but still an anticipated revenue gap of $28 million in fiscal 2019 as proposed personal income tax reductions begin to roll out.
Justice has consistently stated his belief that his roads plan will result in 48,000 jobs and increased economic activity. He has made the same pitch for a proposal to reduce and eliminate the personal income tax.
Fiscal notes for the revenue plans that have been pitched to be key parts of the coming budget have been based on models of traditional tax activity but have not included the potential for increased economic activity.
Lack of “dynamic scoring” for revenue measures is a common complaint from lawmakers who support measures that they believe will result in greater economic activity.
At a Wednesday economic presentation meant to support increased highways construction, state Transportation Secretary Tom Smith said the administration does anticipate jobs growth and economic activity.
Justice has promised 48,000 jobs will result from the highways spending.
“That number, 48,000 jobs, is based on a Duke study where they talked about 20,000 jobs per billion dollars of investment,” Smith said. “So the number the governor used as a base was 2.4 billion, which was the amount of dollars that were on the books at one point.
“He said if we were able to get those dollars moving as quickly as we can, we can have an associated 48,000 jobs with it. There’s an immediacy to those jobs where we as we put construction projects on the road we have an immediate economic benefit from that.”
Smith went on to say, “We’ll push these jobs out, we’ll have immediate jobs resulting from that, and we’ll have immediate economic recovery for West Virginia. We have to do something to stop being last in everything.”
A couple of weeks ago, as the governor made a pitch for his plans to the House of Delegates, he addressed concerns that a proposal to reduce the personal income tax would result in budget holes in coming years.
The governor sought to assure those with doubts that they could trust him to see the numbers clearly. One of the mitigating factors, he said, would be economic growth from both the income tax break and the highways work.
He described those two proposals as working in concert to boost the economy.
“Of everything I’m good at, I can buzz the bloomin’ numbers. I’m telling you what happens is this those road jobs save your bloomin’ bacon for a long time. And if you don’t cut the income tax enough to get real growth coming, the road jobs will run out,” Justice said then.
“And when the road jobs run out if you don’t have some kind of growth then you’re going to have to backfill and you’re going to have to do something.”