West Virginia state budget (2008-2009)
- 1 Impact of budget woes
- 2 Budget background
- 3 Ideas about why the crisis occurred
- 4 Proposed actions
- 5 Budget transparency
- 6 See also
- 7 External links
- 8 Additional reading
- 9 References
Like most states at the time, West Virginia was facing a budget deficit, but was in better shape than most. Previously predicted as an $80 million budget deficit for fiscal year 2010, state officials later prepared for a $200 million deficit. Despite the "gloomy" outlook, Governor Joe Manchin III said that it didn't qualify as a "rainy day" and did not require using the $455 million saved in the "Rainy Day Fund." In order to keep the state financially sound during a time of economic crisis, Manchin reiterated the key points in his State of the State address: modernizing rural health care, moving the state toward renewable and alternative energy production and creating more confidence in the state's courts. Additionally, the governor noted that no layoffs or tax hikes were planned, despite declining state revenue. "As I sit here today, we're still in the best shape of most any state in the nation to come through this better and to come out of it quicker and to be stronger with more opportunities when we do it. If we stay disciplined," and "That's the hard thing now," said Manchin. In March 2009 the governor noted that classrooms and health care budgets were both off limits for budget cuts.
Impact of budget woes
- See also: State budget issues, 2009-2010
- An opinion census survey of West Virginia Chamber of Commerce business leaders revealed that most businesses would have to cut jobs. Approximately 46 percent named legal reform as being the “most” important issue that needed to be addressed by lawmakers.
- For the second month in a row, every county in West Virginia saw an increase in unemployment. The state unemployment rate in February 2009 was 7.5 percent, compared to February 2003 when it hit 7.2 percent. Calhoun County was reported to have the highest jobless rate, with 13.3 percent, whereas Monongalia County reported the lowest jobless rate with 3.7 percent.
- In order to tighten spending Gov. Joe Manchin imposed restricted hiring for all executive branch agencies through June 30, 2009. Additionally, the governor proposed waiting on passing FY 2010's budget until April tax revenues were collected and a better prediction could be made on the upcoming fiscal year. On April 8, 2009 the House and Senate adopted a resolution extending the ongoing session until June 6, 2009.
- The state Public Service Commission announced on March 25, 2009 that West Virginia-American Water customers would see their rates go up 3.5 percent. The rate increase was expected to generate $4.2 million.
- In March 2009 American Electric Power subsidiaries Appalachian Power and Wheeling Power proposed the largest rate increase ever; a three-year schedule with an 18.5 percent increase in 2009, a 14.5 percent hike in 2010 and a 13.2 percent increase in 2011.
- See also: West Virginia state budget
West Virginia's fiscal year begins July 1 and ends June 30 of the following year. Agency budget requests are submitted by September, after which the governor compiles his recommendation for the new fiscal year. Official revenue estimates are completed by November prior to the governor's final budget recommendations. In January the governor presents his proposed budget to the legislature, who proceed to hold a series of hearings from January through March. Typically by March both the House and the Senate complete any necessary changes or additions and the bill is passed to the governor for final approval. However, following a gubernatorial election, the budget process is delayed by one month.
The following table provides a history of West Virginia's expenditures and gross domestic product (GDP).
|Fiscal year||Expenditures (billions)||GDP (billions)|
- NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.
Ideas about why the crisis occurred
- State revenue for March 2009 was $371.5 million, approximately $3.2 million more than had been expected. However, the state Department of Revenue said that the increase was not much and was not likely to be a predictor of revenue for FY 2010.
- In February 2009 state revenue collections were down approximately $45 million for the month alone. For year-to-date collections, revenues were down approximately $17 million from estimates. The state saw a decrease in all tax revenues, with the exception of personal income, cigarette, estate, charter and property taxes.
- West Virginia gaming revenues increased 2.6 percent in March 2009, due to the addition of table games to a third casino compared to two in 2008. Overall, slot revenues were up about 1 percent in West Virginia.
- While working on the FY 2010 budget, Gov. Manchin said he found that design and engineering work contracted out by the state was negotiated by a selection committee inside the Department of Transportation's highway engineering department rather than opened up to competitive bids. This, he said, had been going on since 1990. "If you look at the money, over the years, that's been spent on outside services, it's unbelievable," Manchin said. "To me, that's money that didn't go into road repair, road paving, bridge repair and things of that sort."
Governor Joe Manchin III
For FY 2010, Gov. Machin's proposed spending $3.9 billion from general taxes and fees and another $491.8 million from the lottery; however, in light of declining revenue the governor announced that he would be making adjustments to his proposed budget. Initially the governor planned to trim spending by just two percent but reports stated that the trim might increase to 4.6 percent. Unlike other states that were facing a deficit for FY 2009 and 2010, West Virginia was expected to at least balance its budget for FY 2009. In March 2009 the governor noted that classrooms and health care budgets were both off limits for budget cuts. Additionally, the governor noted that no layoffs or tax hikes were planned, despite declining state revenue.
In an effort to help local businesses, Republican lawmakers offered a proposal to transfer $40 million from an insurance fund to the state's jobless benefits fund instead of forcing businesses and workers to cope with increasing unemployment. Additionally, the bill proposed using $70 million from the state's "Rainy Day Fund." The governor and other lawmakers disapproved of dipping into the "Rainy Day Fund." The unemployment compensation trust fund provided temporary benefits to the unemployed while they sought new work. The fund's primary revenue source was a tax, but with declining revenues Republican lawmakers viewed this as an imperative move. House Minority Leader Tim Armstead said that an increased tax burden could further increase unemployment throughout the state.
Some lawmakers were moving forward with a bill to impose surcharges on local businesses in light of the state's increasing unemployment and decreasing Unemployment Compensation Fund. The proposal suggested that once the fund reached, $220 million employers would be taxed on the first $9,000 of the employee's wages. However, Democratic Delegate Harold Michael suggested amending the bill to keep the base wage rate at $8,000, saying the legislation as written amounted to a $147 million tax burden. Republican lawmakers suggested using some of the "Rainy Day Funds" to avoid negatively impacting businesses. However, some Democratic legislators did not agree that this was time to delve into the state's "Rainy Day Funds." Still, others, like Delegate Tim Miley, said, "We don't have much time. No one wants to do it. No one wishes we were in this position, but ... we are."
Economic stimulus package
West Virginia was expected to receive $1.8 billion from the $787 billion dollar American Recovery and Reinvestment Plan, or "stimulus." All told, the federal stimulus plan would create or save 20,000 jobs in West Virginia, based on White House estimates.
According to preliminary reports, West Virginia was expected to receive:
- $450 million towards Medicaid
- $339.9 million for water, sewer, transportation, and housing projects
- $695.8 million for education, training and school construction
- $70.3 million for weatherization
- $14.5 million for employment and training
- $673.1 million for health care and services for vulnerable families and seniors
Error in ARRP
On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that did not exist. According to Recovery.gov, the plan showed its funds would go to 884 Congressional Districts, though there are only 435.
The ARRP website added eight non-existent Congressional districts in West Virginia, allotting $2,387,321 to eight fictional Congressional districts: the 54th, 9th, 4th, 6th, 12th, 13th, and 00, "creating/saving" a total of 5 jobs.
As of 2009, West Virginia had limited transparency. The West Virginia legislature website posted information about state grant awards, but unfortunately, "The Budget and Spending Transparency Act," which would have created greater spending transparency, did not pass during the 2009 legislative session. However, in state legislator Kelli Sobonya's own words, "I will reintroduce this bill again next session for consideration."
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
|State database||Searchability||Grants||Contracts||Line item expenditures||Dept./agency budgets||Public employee salary||Exemption level|
|State Agency Grant Awards||None|
Economic stimulus transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.
- West Virginia was expected to receive an estimated $947,150,016.
Public employee salary information
- See also: West Virginia state government salary
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- West Virginia State Budget Office
- Public Policy Foundation of West Virginia
- West Virginia Government spending
- West Virginia State Legislature
- West Virginia state site
- Governor Joe Manchin Discusses the Budget and Responsible Government (Video)
- Center on Budget and Policy Priorities, "State budget troubles worsen," March 13,2009
- WSAZ, "W.Va. Faces State Budget Concerns," March 20,2009
- Herald-Dispatch, "Manchin expects tighter budget this year," March 5, 2009
- The Register-Herald, "Almost half of state’s businesses say they would have to cut jobs," March 17,2009
- Associated Press, "Unemployment rises in all W.Va. counties," March 20,2009
- The Charleston Gazette, "Manchin restricts new hiring, says revised budget would wait," April 2,2009
- The Herald Dispatch, "WVa session extended to June for budget," April 8,2009
- Charleston Gazette, "W.Va.-American Water rates go up 3.5 percent," March 25,2009
- State of Virginia, "Budget Process," accessed April 8,2009
- US Government Spending, "West Virginia State and Local spending," accessed April 8,2009
- Wheeling News-Register, "Upswing in Revenue Unlikely to ContinueUpswing in Revenue Unlikely to Continue," April 5,2009
- State of West Virginia, "Revenue Collections fiscal year 2009," February 2009
- Gaming Today, "Report: rate of gambling revenue decline slowing," April 7,2009
- Associated Press, "W.Va. gov still crafting 2009-2010 budget cuts," March 26,2009
- Associated Press, "W.Va. House to swap revenues in jobless fund bill," April 8,2009
- The Charleston Gazette, "Jobless fund tax plan advances in House," April 6,2009
- The Charleston Gazette, "W.Va. stimulus cut: $1.8 billion," April 4,2009
- American Recovery and Reinvestment Act, "Impact," accessed April 8,2009
- West Virginia Public Broadcasting, "Hospitals disagree with Medicaid over stimulus money," April 8,2009
- $6.4 Billion Stimulus goes to Phantom Districts, Watchdog.org, November 17, 2009
- Stimulus Creates Jobs in Non-Existent Congressional Districts, Watchdog.org, November 16, 2009
- Obama Recovery Act Increases W.Va. Congressional Districts by Eight!, West Virginia Watchdog.org, November 16, 2009
- West Virginia Republican Party, "Delegate Sobonya's guest editorial submitted to herald dispatch/wayne co. news," June 17, 2009
- National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- Wall Street Journal, "State Stimulus Spending," March 12,2009