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State Budget: More cuts, rainy day funds

By Staff | Jan 16, 2015

CHARLESTON, W.Va. – West Virginia Revenue Secretary Bob Kiss said the state budget that begins July 1 is projected to have a $195 million gap.

Gov. Earl Ray Tomblin plans to close the gap with targeted reductions and a withdrawal from the state’s Rainy Day Funds, he said.

Kiss was one of more than a dozen leaders who spoke Monday at the West Virginia Associated Press Legislative Lookahead in Charleston.

The state has been experiencing flat revenues during the past few years because of falling energy prices and lower coal demand; weak wage growth; a 2013 federal payroll tax increase; and turmoil in the federal government and health care sectors, Kiss said.

He also pointed out that the state has reduced taxes by $425 million over the last decade, including business tax reductions and a phase-out of the sales tax on food.

Kiss reviewed recent budgets, noting that:

* The 2013-2014 budget was balanced by imposing a freeze on hiring, by making special appropriations, and by implementing a 7.5 percent spending cut that affected 25 percent of the budget.

* The current 2014-2015 budget is being balanced by drawing $100 million from the Rainy Day Funds, implementing a 7.5 percent spending cut (3.75 percent for higher education), and several other moves.

Gov. Tomblin’s 2015-2016 budget, which begins July 1, will project a $195 million gap, Kiss said. To close the gap, Tomblin will propose targeted reductions instead of across-the-board reductions like those implemented in the past.

Kiss didn’t reveal the proposed reductions but warned that “if those cuts are not maintained by the Legislature or other cuts are not put in place, you’ve kicked the can down the road” and millions of dollars will have to be found every year forever. “I’m sure there will be opposition to the cuts but it’s important to not drive the bus into the ditch,” he said.

For the second straight year, Tomblin will propose drawing some money from the Rainy Day Funds, Kiss said. Some media outlets have reported that Tomblin will seek $80 million from the funds. Kiss said he anticipates it will be less.

Tapping the funds again will be controversial. Outgoing Senate President Jeff Kessler, D-Marshall, said he will resist another withdrawal.

The funds currently have a balance of more than $856 million. Kiss stressed that the reserves will be in good shape even after another withdrawal.

Kiss began serving in state government in 1989. He recalled that back then, “we didn’t have anything – we just had piles of bills. As difficult as things are right now, they were far worse then. We have made tremendous progress.”