Revenue improvement helps Justice’s budget options, including raises

CHARLESTON, W.Va. — An improving West Virginia economy has given Gov. Jim Justice more leeway in proposing the state budget this year.

“Today we have things that are so good,” Justice said in his third State of the State speech. “Surpluses. No new taxes. In fact, we’re going to cut taxes.”

Justice and his staff are proposing a $4.675 billion budget for the coming fiscal year. The biggest part of the spending, as always, will be on public education.

Months ago, Justice promised an average 5 percent pay raise for teachers and other public employees. His budget proposal makes good on that pledge.

The governor is recommending pay raises of $2,120 for teachers, $1,150 for service personnel and $2,370 for other state employees. The budget proposal also includes the second year of a three-year increase for corrections employees.

Altogether, the governor’s staff said, the raises add up to $167 million.

A few months ago, the governor also promised

The $100 million the governor promised to shore up the Public Employees Insurance Agency. But during his State of the State he upped that amount to $150 million.

The influx for PEIA will be handled separately from the General Fund appropriation — through a supplemental appropriation based on the recent surpluses the state has been running.

Justice has been expressing confidence because of recent revenue trends.

For the current fiscal year, the state was running a $189.5 million surplus through the end of December.

Since April — a period that crosses fiscal years — the state is up $234 million.

The upward trend is reflected in the proposed fiscal 2020 budget.

Revenue projections are going up 2.05 percent, the governor’s revenue staff said.

Meanwhile, the proposed expenditures represent a 1.73 percent increase.

That’s an improvement over recent years that required holding steady or making significant cuts. Some of those years meant dipping into the state’s reserve funds, commonly called Rainy Day, but that won’t be the case this year.

“Obviously there have been some challenging budget years in the past,” said Michael Cook, the governor’s budget director.

The budgetary breathing room has allowed some give.

The governor’s staff said this year’s budget includes an additional $20 million for social services, $20 million for deferred maintenance, $14 million for tourism and $25 million for substance abuse programs.

The budget proposal also takes into account a proposed personal income tax cut on Social Security benefits. The governor’s staff said about 78 percent of Social Security recipients in West Virginia are already exempt because of their income levels.

But doing away with the tax would put West Virginia on par with most other states. The governor’s staff said West Virginia is one of only 13 states to tax Social Security benefits and that contiguous states don’t have such a tax.

Both Republicans and Democrats in the Legislature have expressed support for eliminating income tax on Social Security.

During a morning legislative meeting on Wednesday, West Virginia University economist John Deskins urged lawmakers to continue to lay the groundwork for economic recovery.

“We have reasons to celebrate,” Deskins said. “Clearly the WV economy is doing better. Definitely some numbers are looking up, some numbers have improved.”

But, he warned, “The improvement isn’t happening everywhere. It’s too isolated. We need to expand upon the improvement we have.”

The leaders of the House and Senate have made reference to economic goals.

“We’ve made tremendous strides in the past few years to improve the economy, education and legal systems and overall way of life for all West Virginians, and in this session, we will take those improvements to a whole new level,” Senate President Mitch Carmichael said earlier this week.

House Speaker Roger Hanshaw expressed a similar desire.

“My goal is that when we look back at the 2019 session, we will see it as a watershed year toward launching West Virginia to a higher level of prosperity,” Hanshaw said. “We turned the corner over the last few years, and now it’s time to reach to new heights.”

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