Midyear state budget revisions featuring substantial spending cuts have been a way of life in West Virginia during the past couple of years. Legislators and Gov. Earl Ray Tomblin need to do all they can to avoid that next year.
State Senate President Bill Cole has the right idea. “We have to begin with a real number,” Cole, R-Mercer, emphasized in an opinion column published Saturday in The Intelligencer. “Our revenue estimates simply have to be more accurate,” he explained.
Precisely. Spending plans based on overly optimistic revenue estimates are doomed to failure. That has been why Tomblin was forced this year and previously to order spending cuts in the middle of the fiscal year.
Unfortunately, the governor’s revenue estimates for the year that begins July 1 appear to be flawed, too. They may be off by hundreds of millions of dollars.
Severance taxes from the coal, gas and oil industries have been the worst culprits during the past few years. During the first eight months of this fiscal year, severance taxes brought in only about half what had been expected. By the end of February, actual revenue from that source was $142 million less than was included in the budget.
Revenue declines in consumer sales, personal income, and corporate income and franchise taxes also have been recorded. Though much less dramatic than the severance tax problem, those factors may foreshadow trouble coming in the state economy.
Yet Tomblin’s proposed general fund budget for the coming year, $4.32 billion, is about $22 million higher than for this year.
Some of that is accounted for by proposed tax increases. But legislators have not been eager to increase taxes.
And some of the governor’s budget appears to be based on wishful thinking regarding revenue.
Cole is right. Legislators must obtain the most realistic figures available for revenue. Enacting a budget based on what amounts to shifting fiscal sand of how much the state will have to spend would not be prudent.
Lawmakers are meeting now to discuss the budget – but Tomblin’s call for that process included just three days, starting Sunday. That may not be enough time to come up with reliable revenue estimates. Unless legislators are completely comfortable with the numbers, they should not pass a budget on the governor’s schedule. Better to wait a few days – or weeks – and get it right.