West Virginia state budget
From Sunshine Review
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Like most states West Virginia is facing a budget deficit but is in better shape than most. Previously predicted as a $80 million[1] budget deficit for fiscal year 2010, state officials are now preparing for a $200 million deficit. Despite the "gloomy" outlook, Governor Joe Manchin III said that it doesn't qualify as a "rainy day" and does not require using the $455 million saved in the "Rainy Day Fund."[2] 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.[3] Additionally, the Governor noted that no layoffs or tax hikes are planned, despite declining state revenue.[2] "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.[3] In March 2009 the Governor noted that classrooms and health care budgets are both off limits for budget cuts. [2]
[edit] Impact of budget woes
- An opinion census survey of West Virginia Chamber of Commerce business leaders revealed that most business will have to cut jobs. Approximately 46 percent named legal reform as being the “most” important issue that needs to be addressed by lawmakers. [4]
- For the second month in a row West Virginia every county 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 is reported to have the highest jobless rate with 13.3 percent, whereas Monongalia County reported the lowest jobless rate with 3.7 percent. [5]
- In order to tighten spending Gov. Joe Manchin imposed restricted hiring for all executive branch agencies through June 30, 2009. Additionally the Governor has proposed waiting on passing FY 2010's budget until April tax revenues are collected and a better prediction can be made on the upcoming fiscal year. [6] On April 8,2009 the House and Senate adopted a resolution extending the ongoing session until June 6, 2009. [7]
- The state Public Service Commission announced on March 25,2009 that West Virginia-American Water customers will see their rates go up 3.5 percent. The rate increase is expected to generate $4.2 million. [8]
- 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. [8]
[edit] Budget background
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. Officials 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. [9]
[edit] Budget figures
The following table provides a history of West Virginia's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $10.0 [10] | $41.5[10] |
| 2001 | $11.0 [10] | $43.4 [10] |
| 2002 | $12.0 [10] | $45.0 [10] |
| 2003 | $12.1 [10] | $46.5 [10] |
| 2004 | $12.2 [10] | $49.7 [10] |
| 2005 | $12.1 [10] | $53.0 [10] |
| 2006 | $12.4 [10] | $56.0 [10] |
| 2007 | $12.6 [10] | $57.7 [10] |
| 2008 | $12.9 [10] | $59.5 [10] |
| 2009 | $13.2* [10] | $61.3* [10] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- 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 is not likely to be a predictor of revenue for FY 2010. [11]
- 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. [12]
- 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. [13]
- 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."[3]
[edit] Proposed actions
[edit] 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 now reports state that the trim may increase to 4.6 percent. Unlike other states that are facing a deficit for FY 2009 and 2010, West Virginia is expected to at least balance its budget for FY 2009. [14] In March 2009 the Governor noted that classrooms and health care budgets are both off limits for budget cuts. Additionally, the Governor noted that no layoffs or tax hikes are planned, despite declining state revenue.[2]
[edit] Republicans
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 proposes using $70 million from the state's "Rainy Day Fund." The Governor and other lawmakers disapprove dipping into the "Rainy Day Fund." The unemployment compensation trust fund provides temporary benefits to the unemployed while they seek new work. The fund's primary revenue source is a tax but with declining revenues Republican lawmakers view this as an imperative move. House Minority Leader Tim Armstead said that an increased tax burden could further increase unemployment throughout the state. [15]
[edit] Democrats
Some lawmakers are 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 current proposal suggests that once the fund reaches $220 million employers would be taxed on the first $9,000 of the employee's wages. However, Democrat Delegate Harold Michael suggested amending the bill to keep the base wage rate at $8,000, saying the legislation as written amounts 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 don't agree that it's 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." [16]
[edit] Economic Stimulus Package
West Virginia is expected to receive $1.8 billion from the $787 billion dollar economic stimulus.[17] All told, the federal stimulus plan would create or save 20,000 jobs in West Virginia, based on White House estimates.[18]
For more information on how the federal stimulus funds are being used in the state of West Virginia, visit the state recovery website.
According to preliminary reports West Virginia is expected to receive:
- $450 million towards Medicaid [19]
- $339.9 million for water, sewer, transportation, and housing projects [17]
- $695.8 million for education, training and school construction [17]
- $70.3 million for weatherization [17]
- $14.5 million for employment and training [17]
- $673.1 million for health care and services for vulnerable families and seniors [17]
[edit] Budget transparency
West Virginia currently has limited transparency. The West Virginia legislature website posts information about state grant awards here, but unfortunately "The Budget & 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 [The Budget & Spending Transparency Act] again next session for consideration."[20]
[edit] Legislation
- In 2005, the Legislature passed legislation that requires recipients of state grants to submit to the granting agency a report performed and prepared by a certified public accountant or a sworn statement of expenditures made under the grant. The purpose is to provide accountability that grant funds were used for intended purposes.
- The Legislature first passed Senate Bill 348 during the 2005 Regular Session. Later, during the 2005 Fourth Extraordinary Session, the Legislature passed Senate Bill 4006, which superseded the earlier-passed Senate Bill 348. It is now the responsibility of any agency that awards grants to ensure that the above described accountability measures are being taken, and the grant award information is reported in a manner designated by the Legislative Auditor. The site was created with existing resources.
- The transparency law stipulated that recipients of grants after October 1, 2005 must report on the amount of funds received and their purpose within 30 days of the grant’s authorization or disbursement. If a grant recipient does not comply with the reporting requirements, it is barred from future awards. Unless the agencies report pertinent data about awards to the Legislative Auditor, the eligibility of grant recipients cannot be determined properly.[21]
- A June 2007 report from the Legislative Auditor's office found that "most state agencies are not in compliance with reporting requirements set forth by the 2005 legislation." Almost two years had gone by since the transparency law was passed, and yet only 12 state agencies had reported any grant information.[22]
- A January 2008 update from the Legislative Auditor's office said they "contacted 80 state agencies. Sixty-two agencies reported that they did not provide grants, 16 agencies stated that they were providing state grants and are using the WVFIMS Commitment module, and 2 agencies did not respond. Of the 16 agencies that stated they were awarding state grants, only 6 agencies were not in compliance with the WVFIMS/SAGA system."[21]
[edit] Government tools
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 |
[edit] Limitations and Suggestions
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[23]
- West Virginia will receive an estimated $947,150,016.[24]
- The economic recovery website to show how legislators and government officials in West Virginia are spending Federal funds is available here.
[edit] Support for creation of the database
[edit] Independent transparency sites
None.
[edit] Public employee salary information
A searchable database of salaries of West Virginia state employees is available here. This information is made availble by Huntingdon's Herald Dispatch.
[edit] See Also
West Virginia taxpayer-funded lobbying
[edit] External links
- 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)
[edit] Additional reading
[edit] References
- ↑ Center on Budget and Policy Priorities,"State budget troubles worsen," March 13,2009
- ↑ 2.0 2.1 2.2 2.3 WSAZ,"W.Va. Faces State Budget Concerns," March 20,2009
- ↑ 3.0 3.1 3.2 Herald-Dispatch, "Manchin expects tighter budget this year", March 5, 2009
- ↑ The Register-Herald,"Almost half of state’s businesses say they will 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 will wait," April 2,2009
- ↑ The Herald Dispatch,"WVa session extended to June for budget," April 8,2009
- ↑ 8.0 8.1 Charleston Gazette,"W.Va.-American Water rates go up 3.5 percent," March 25,2009
- ↑ State of Virginia,"Budget Process," retrieved April 8,2009
- ↑ 10.00 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 US Government Spending,"West Virginia State and Local spending," retrieved 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
- ↑ 17.0 17.1 17.2 17.3 17.4 17.5 The Charleston Gazette,"W.Va. stimulus cut: $1.8 billion," April 4,2009
- ↑ American Recovery and Reinvestment Act,"Impact," retrieved April 8,2009
- ↑ West Virginia Public Broadcasting,"Hospitals disagree with Medicaid over stimulus money," April 8,2009
- ↑ West Virginia Republican Party, "Delegate Sobonya's guest editorial submitted to herald dispatch/wayne co. news," June 17, 2009
- ↑ 21.0 21.1 West Virginia Legislature,"State Agency Grant Award Reporting Requirement," January 2008
- ↑ West Virgina Legislature,"State Agency Grant Award Reporting Requirement," June 2007
- ↑ 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
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