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Time to Cut

Justice wants $100M to be slashed from budget

It felt good to loosen our belts for awhile, didn’t it? Unfortunately, it is time to tighten them again.

West Virginia Gov. Jim Justice has told heads of state agencies to find ways to spend $100 million less than they had planned for the current fiscal year. Lagging revenue — nearly $30 million below estimates for the first three months of fiscal 2020 — is being blamed.

Shaving $100 million out of the $4.71 billion general revenue budget may not sound difficult. Consider the fact that about two-thirds of the budget is for fixed costs that cannot be reduced, and the chore becomes more painful, however.

After several tight budget years, much of the last one was a pleasant surprise. Revenue was much higher than expected, allowing Justice and legislators to loosen our belts and spend more than state officials have for some time. Pay raises for state employees, a little more money for road repairs and assorted other good things were made possible.

It is not as if the bottom dropped out of the economy during the past few months. However, state government is not bringing in enough money to cover the fiscal 2020 budget — so belts have to be tightened again.

State officials have blamed the revenue slowdown primarily on severance taxes. That is not the full story, however.

It is true that during the first three months of fiscal 2020, severance taxes brought in $26.4 million less than expected. But personal income tax collections were bad, too, at $21.5 million below projections for the first three months.

In other words, the problem may not be restricted to the natural gas and coal industries, the source of most severance tax revenue. A mild but general slowdown in the state’s economy may have begun.

We hope not. But prudence dictates that unless the state’s economy kicks into high gear later this year, Justice and legislators should begin planning for next year’s budget at $4.61 billion — this year’s original budget minus the $100 million cut — and work downward from there.