State ended budget year with deficit; Justice administration calls it a clerical error

CHARLESTON, W.Va. — The Justice administration says it’s fixed a revenue reporting error that happened in the final hours of the fiscal year Tuesday night enabling the state to have a small surplus when the books are closed at the end of July.

Despite the fix, there remain questions about whether the administration violated the state Constitution by finishing the fiscal year at midnight Tuesday with a budget deficit.

Dave Hardy

According to the governor’s office, the revenue reporting error occurred when nearly $2 million of income withholding taxes from state employee paychecks was deposited in the wrong fiscal year Tuesday. The administration first thought it had a $500,000 surplus when midnight came when it really had a $1.3 million deficit.

A news release from the governor’s office Wednesday evening said the administration came up with a fix with the state Auditor’s Office by allowing additional spending cuts from the budget that ended Tuesday night.

The state actually did finish the budget year with a deficit, which is unconstitutional, but it was unclear what, if any impact, that would have going forward. The state Constitution says when there is a deficit the legislature is to be called into session to raise taxes.

At governor’s media briefing earlier Wednesday, state Revenue Secretary Dave Hardy said they were still trying to determine what had happened.

“We plan to file whatever we need to correct the clerical mistake that was made. It clearly wasn’t a substantive mistake. It was one that was done through the computer with no one from the revenue department being involved,” he said.

Gov. Jim Justice

Justice said in the scope of a $4.7 billion general revenue budget, a $1.3 million deficit is “absolutely nothing.”

But he added, “At the same time, we always want it to be right. These are the kind of mistakes we don’t want to see happen but this is a very minute mistake.”

The governor’s office was doing a lot of money shifting with hours to go in the fiscal year Tuesday. The administration had to come up with ways to cover a $255 million revenue deficit, largely caused by the pandemic. It cleared those hurdles by removing $186 million in general fund money for Medicaid from the state Department of Health and Human Resources budget and sweeping the accounts of three other state agencies to the tune of $12 million.

State Auditor J.B. McCuskey may comment on the developments Thursday along with legislative leadership.

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