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What the new WV budget does and doesn’t do

CHARLESTON, W.Va. — Gov. Jim Justice says a budget he’s allowing to become law without his signature is a travesty.

The budget passed last Friday night by the Legislature does reduce spending to a wide variety of state programs.

It’s about $280 million less than what the governor proposed in his State of the State address and almost $125 million less than the budget the governor proposed in special session.

“If you want my true feelings about what we have, I think we have a travesty,” the governor said Wednesday at a news conference.

“As best I can tell you, I can’t sign this. I can’t possibly sign this because of the pain that it’s going to cause so many people and the direction that it puts us in basically solving none of our problems.”

The governor said he signed the budget bill only because the state was finally up against the start of the new fiscal year on July 1.

Justice had an entire whiteboard dedicated to the cuts present in the budget.

What the budget doesn’t do

Some of the most significant aspects of the budget are encompassed by what it doesn’t do.

The bill the governor favored, one backed by Senate Republicans, would have raised an estimated $92 million in additional revenue for the coming fiscal year.

Democrats and House Republicans objected to aspects of that plan that would have raised sales taxes while cutting personal income taxes.

Those groups had agreed to a conference committee proposal that would have extended the sales tax to additional economic sectors. That proposal was estimated to bring in an additional $67 million.

Senate Republicans didn’t favor any plan that didn’t include the income tax reductions, so in the end both revenue proposals went nowhere.

The bill that passed removes all of the sales tax increases that would have led to additional revenue.

The budget bill also leaves out income tax reductions favored by Senate Republicans and the governor.

Aspects of that proposal such as tax breaks on veterans retirement and Social Security income also fell through, as did a rebate for low-wage earners.

There were multiple incarnations of the income tax plan and almost everyone had trouble tracking the financial effects.

The Tax Foundation, which advocates for tax cuts, took note of the various plans. On the other side, so did the Institute on Taxation and Economic Policy.

Most projections showed revenue holes in coming years, although the proposals presented late in the special session were less aggressive.

Proponents said the income tax cuts would give citizens a break and would have stimulated the economy. But critics noted that the same citizens would also be paying greater sales taxes — probably significantly greater for lower earners.

It’s hard to specify a full effect because the sales tax increase and income tax reduction proposals — including the brackets and rates — changed so many times.

The last version of that budget estimates $50 million or more in additional revenue over the coming years, but that assumes no further triggered income tax reductions. More reductions would have resulted in deficits unless the economy truly picked up.

The budget does not include a tiered coal severance tax system that the governor said would have given struggling companies a boost when prices are low. Going ahead would have meant a loss of $37 million in revenue, estimates showed.

“It’s going to hurt our coal miners for nothing, for nothing,” Justice said. “We had the best tiering possibility on the planet.”

The budget does not have a payraise for teachers, which would have cost about $19 million. “We threw our teachers in a ditch,” Justice said.

It does not have the governor’s Save Our State fund for infrastructure and economic development. That was a $105 million idea when first presented and then scaled back to $25 million.

What stays the same, through fiscal sleight of hand

The budget keeps Medicaid spending even, avoiding the sacrifice of federal matching funds. It does so, though, with a blend of transfers and expected surpluses.

That’s essentially an $84 million backfill of Medicaid. Lawmakers said those surpluses, based on past experience, are almost certain to be there.

That was enough to get the administration to turn off a state-of-emergency lantern atop the Capitol, although the governor still didn’t like the funding mechanism.

“We have fake surplus money that will lead to additional DHHR and Medicaid cuts, guarantee it,” Justice said.

What gets cut

The West Virginia Center for Budget and Policy, which analyzes and advocates about taxes, has a handy breakdown with a chart of the cuts.

The cuts that created the biggest concern among lawmakers, particularly Democrats, were to the state’s higher education system.

The budget cuts $7.5 million from colleges and universities, $2.5 million from community and technical colleges, $323,000 for community and technical education and $228,000 from the higher education policy commission.

That’s on top of a $10 million higher education cut in the governor’s original budget proposal.

There’s a $5.3 million cut from the Department of Education. That includes a $1 million cut from 21st Century Assessment and Professional Development and eliminating Innovation in Education and Technology Systems Specialist funding at $4.5 million.

There’s a $4.5 million cut from the Division of Health. That includes eliminating $3 million in funding for the Tobacco Education Program.

The budget has a $5 million cut from the Consolidated Medical Service Fund.

There’s a $3.8 million cut from the Division of Corrections and a $1.5 million cut from the State Police.

The Tourism advertising budget takes a $5 million cut, and fairs and festivals are cut by $832,000.

The Educational Broadcasting Authority, which had its funding eliminated in the governor’s original proposal, is funded in this budget but still has a $1 million cut.

The Women’s Commission, which was eliminated by the Legislature in the regular session, had its $155,000 in funding cut again.

There are also tens of thousands in cuts to state offices such as the Governor’s Office, the Auditor and the Attorney General.

Those are significant cuts, but not nearly as dramatic as the “alternative budget” the governor presented with his State of the State address. The “alternative budget” zeroed out entire colleges and universities.

Earlier versions of the budget did cut deeper.

The budget bill that passed during the regular session — the one the governor inimitably vetoed — used $90 million in Rainy Day Funding and cut $140 million from the medical services line item and a $30 million cut from higher education.

Lawmakers largely escaped having to make those deep cuts just a few months later because the Justice administration raised state revenue estimates from $4.055 billion to $4.25 billion.

An earlier version of the budget that passed the Senate in special session cut $34 million from Medicaid and $33 million from higher education.

Mitch Carmichael

Speaking today on MetroNews’ “Talkline,” Senate President Mitch Carmichael didn’t exactly have high praise for this version of the budget but said it does what it has to do.

“It is a responsible budget that provides fiscal stability for our state,” said Carmichael, R-Jackson. “It’s roughly 98 percent of what we funded last year.”

Carmichael and most of his fellow Senate Republicans favored the budget that included the personal income tax cuts.

Tim Armstead

House Speaker Tim Armstead, calling in to “Talkline,” disputed the notion that the budget that passed does nothing.

“This budget makes the cuts we have to make under the current economic situation,” said Armstead, R-Kanawha.

Armstead said lawmakers gave a lot of thought to the structure of the cuts.

We spread the cuts throughout government,” Armstead said Wednesday on “Talkline.”

“I think the cuts that were made are responsible. These cuts could be much much worse.”

Justice, speaking to the audience gathered as he announced his intentions about the budget, remained unimpressed.

“There is no plan here,” he said. “All this does is kick the can down the road.”

The governor said he’s worried the state will be right back in the same position next year.

“Where is this going to put us?” he asked. “Do you really think we’re going to come back in an election year, we’re going to come back in here and fix this? We’re not going to do this. This puts us on a pathway for a long time with a lot of pain and bad stuff.”

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