Justice proposes shifting funds to balance state budget, allocating $1.25 billion in federal relief

Gov. Jim Justice described how West Virginia will balance its budget by the the end of the fiscal year, which is Tuesday, while also outlining priorities for using $1.25 billion in federal relief.

“This is my wheelhouse. This is where I’m at my best,” he said.

But the explanation still left legislators, who constitutionally have the power of the purse, wondering why they are being left out of a direct oversight role.

“We have absolutely vetted this from end to end. And, you know, I think the federal government’s directive is for me to administer this and to do this. I would always welcome the help and everything,” Justice said, responding to a question during Friday’s briefing.

Brian Abraham, general counsel for the Governor’s Office, followed up by making reference to consultants who concluded that the current budget bill would be extended in concept to federal dollars that were received after the Legislature already met and approved a budget.

Justice spoke with legislative leaders during a lunch meeting at the Governor’s Mansion prior to laying out his plan to the public.

Afterward, lawmakers acknowledged unresolved questions about their own involvement with reallocation of state funds and allocation of federal funds.

Roman Prezioso

“I’d think that’s the prerogative of the Legislature, but he doesn’t think so,” said Senate Minority Leader Roman Prezioso, D-Marion.

Prezioso said lawmakers asked the governor those questions during the meeting.

He said the response from the governor was, “Our attorneys have researched it and we don’t need to have a special session. This budget is as good as it can get because I did it. I don’t want to start a food fight by bringing the Legislature in.”

Craig Blair

Senate Finance Chairman Craig Blair, R-Berkeley, alluded to lingering questions of legislative involvement too.

“It’s always nice when the Legislature’s involved. There’s many of my members who think the Legislature should have the oversight of this,” Blair said.

He added that the executive branch is often responsible for overseeing federal grant allocations.

“We’ve just never had $1.25 billion,” Blair said.

But as an overall assessment of the governor’s financial plans, Blair concluded, “I’m impressed with it.”

Justice said West Virginia projects a year-end deficit of $285 million if no action is taken.

But he said the state will close that by using reserves, which probably means money the state set aside for Medicaid expenses, and by identifying expenses eligible for reimbursement through the federal relief for states.

By taking those actions, he said, the state will conclude the fiscal year with a $10 million surplus.

“We’re going to turn out a surplus in a year that looked like chaos beyond chaos,” he said.

The governor also laid out a framework for using $1.25 billion in federal relief. The U.S. Treasury has said states may use the money for direct expenses of the coronavirus pandemic as well as to help individuals and small businesses that have been hurt by the pandemic.

Gov. Jim Justice shows priorities for spending federal relief.

Much of the money — $287 million for this fiscal year and $400 million for the coming fiscal year — is meant to bolster the unemployment insurance fund run through Workforce West Virginia.

Another $200 million would be allocated to relieve local governments of their own coronavirus-related expenses.

And $150 million is aimed at relieving small businesses.

The proposal that raised eyebrows among the public was $100 million aimed at “covid 19-related highway projects.”

Justice said, “We’ve classified a lot of our highways stuff as covid-related highway work, and by doing that we’re able to move some dollars we had dedicated to those roads over into doing other roads within West Virginia.”

Blair said he was intrigued by this move.

“The one I find interesting is covid-related highway projects,” Blair said, noting that West Virginia had been $45 million short in its road fund.

$45 million short on road fund

“If they have a way to manipulate more money into the roads and it’s legal and meets the requirements of the federal government, OK, good,” Blair said.

He gave a slightly more detailed interpretation than the governor did.

“If a connector road goes to a health department that needs access or hospital or testing facility, those highways would be eligible for improvements,” Blair said.

Justice was pretty impressed with his financial plan.

“I told you it was going to work,” he said.

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