Gov. Jim Justice continues to bank on federal relief to cover a projected state budget deficit of a half-billion dollars.
Senator Shelley Moore Capito recognizes the need but isn’t yet sure if the federal dollars may be used to backfill states.
“I don’t have any insights, but I can tell you from calls I’ve been on with other senators this has been a pretty universal problem for every state,” Capito, R-W.Va., said today on MetroNews’ “Talkline.”
The enormous federal relief passed a few weeks ago includes billions of dollars meant to help states pay for the costs of coronavirus response.
“Our state is due to get $1.25 billion dollars, but you have to show the damage there,” Capito said.
But in addition to direct costs, states like West Virginia have experienced indirect economic loss.
By delaying state income tax filings until July 15, West Virginia estimates the deferral of $300 million until the next fiscal year. And state officials believe the suppressed economy is leading to an additional $200 million in lost tax base.
That’s a big gap in West Virginia’s $4.6 billion general revenue fund.
“If you can’t account for your tax revenues going down, that’s the biggest chunk,” Capito said.
Federal rules for how states can use the money are expected within the next week. If the rules don’t allow for flexible use of the money appropriated by Congress, Capito said it’s possible the issue could be revisited when Congress returns next month.
The National Governor’s Association last week asked for increased flexibility to apply the money to additional expenses.
And the National Governor’s Association also asked for an additional $500 billion to cover state revenue losses.
During a daily news briefing today, Justice again expressed confidence that the federal relief package will help states avoid budget disasters.
“I do not think we’ll have to lay anybody off,” Justice said of state employees. “I don’t think we’re going to have to cut services in our state. I think the backfilling that’s going to come from the federal government will bridge us until next year.”