Disappointing

State finances may not be as rosy as predicted

Just a month ago, Gov. Jim Justice told his fellow West Virginians dramatic changes had occurred during the previous year. Referring to the “dire” situation 12 months ago, he said that now, “you can’t imagine how promising it looks.”

Unfortunately, in terms of state government finances, it looks about the same.

Justice is right, in a way. West Virginia’s economy does seem to be headed in a desirable direction. That has not yet trickled up to state government, however.

This was supposed to be the year in which Justice and legislators did not have to haggle endlessly and acrimoniously about balancing the state budget. Promising revenue reports for a few months seemed to indicate there would be plenty of money available, not just to avoid spending cuts, but to do good things for the state.

But the January revenue report makes that questionable. At the end of the month, seven months into the fiscal year, collections for the general revenue budget were $25.5 million below estimates on which the spending plan was based.

January was the straw that broke the camel’s back. Prior to that month, year-to-date collections had been slightly in excess of budget estimates. But that single month, with a $28.1 million deficit, wiped out the previous half-year’s rosy reports.

Two line items are of particular concern. Combined, collections from the consumer sales tax and business and occupation tax were $33.1 million under projections for the first seven months. That reflects a lack of spending by Mountain State residents.

That all-too-familiar disappointment, severance taxes, is getting worse, not better. Collections for the first seven months of the year were $27 million below estimates.

All this has to be terribly depressing in Charleston, where Justice and legislators want to increase state employees’ pay, cut taxes and spend more on economic development.

Where will they find the money? The governor and lawmakers may have to find ways to reduce spending in some areas, to free up money for better uses.

That could prove to be the silver lining in the dark cloud of revenue reports.

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