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Lawmakers start to question aspects of Justice’s budget proposal

CHARLESTON, W.Va. — A day after Gov. Jim Justice laid out new spending and tax cuts, lawmakers began questioning some aspects of his proposals.

Justice and his staff are proposing a $4.675 billion budget for the coming fiscal year.That’s about $300 million above the current fiscal year.

That may be possible because of a recent upward revenue trend. Just partway through the current fiscal year, the state has been running a $189.5 million surplus through the end of December.

Being ahead is allowing Justice and his staff to raise the original revenue estimates by $142 million for this fiscal year. That’s on top of a $58 million revenue estimate increase that Justice made last year but which the Legislature didn’t quite trust.

The adjustment allows some of Justice’s spending proposals to be allocated to the current fiscal year as supplemental appropriations, rather than being considered for next year’s budget.

“The easiest way to understand our budget today is to think of it as two completely separate buckets,” Justice said during a news conference today.

He said that would help pay for “all the stuff you’ve maybe been skeptical of or worried about and saying ‘how are we going to pay for all this stuff?'”

For example, the influx to public employees insurance of more than $100 million is being discussed as a supplemental appropriation for the current fiscal year.

That’s also the case for aspects of Jim’s Dream, which Justice described during his State of the State address as a drug addiction treatment program that will also provide workforce training. Justice proposes spending $25 million for equipment and another $25 million for DHHR and the Department of Education to start the program.

“That’s not going to affect one single dime going forward because it’s money we’ve already got,” Justice said.

There is a side effect, though. Normally, half of any end-of-the-year surplus is dedicated to the state Rainy Day Fund. If the surplus instead is already spent through supplemental appropriations then there would be less going back into reserves.

Lawmakers on finance committees questioned the plan for supplemental appropriations, the upcoming budget priorities and whether West Virginia’s current energy renaissance will last long enough to carry state revenue through the coming years.

Doug Facemire

Senator Doug Facemire, D-Braxton, questioned whether the state will commit to Jim’s Dream without certainty that it can be funded into the future.

“How much is it going to cost next year and the year after that and the year after that?” Facemire said. “We can’t spend $25 million and then say we don’t have enough money to keep it going.”

Facemire also asked how long the current fiscal health will last.

During a morning Finance session, Deputy Revenue Director Mark Muchow had described much of the current situation as the product of vigorous energy markets, including coal exports and the ongoing construction of enormous natural gas pipelines across West Virginia.

“I’d like to see what our budget would look like today if we didn’t have that – if the pipeline construction wasn’t going on – because we all know this is temporary,” Facemire said.

“What we need to be worried about is how are we going to backfill this. We all know this growth we’re experiencing right now is not going to last. It’s like when the carnival comes to town. For one week it’s really good and then it leaves.”

Corey Palumbo

Senator Corey Palumbo, D-Kanawha, also suggested officials should be careful with appropriations now in anticipation of an energy market downturn.

“You seem like you are cautious as far as long-term sustainability of what we’re experiencing now,” Palumbo told Muchow.

“I did not get the feeling the governor shared your caution because he outlined expenditure after expenditure and tax cut after tax cut.”

Muchow’s answer referred to a nickname he has carried at the Capitol for years because of his cautious approach.

“A lot of times in economics the forecast is partly cloudy,” he said. “The governor’s outlook is sunny. My nickname is ‘Gloom.’

Facemire commented that the strength of pipeline construction has allowed the governor to feel optimistic. Without the pipelines, he suggested, the state’s budget outlook would be very different.

“If we didn’t have a pipeline business in this state right now, our State of the State address last night would have had a completely different tone to it,” Facemire said.

Dave Hardy

Revenue Secretary Dave Hardy told assured lawmakers that the budget package was planned conservatively.

“All the out years are positive, all six years, so that certainly is a good thing,” he said. “And we tried to design this budget — and the governor told us to do it this way — where we did not put the out years in the negative numbers.”

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