Ups and Downs
State needs more than belt tightening
State officials point to “natural growth” in government revenue as the way they expect to have enough money to phase out a $100 million-a-year tax that hampers economic development. That is not an unrealistic expectation; during the past decade, general revenue fund collections have increased by nearly $1 billion.
But there have been ups and downs, including a period during which emergency spending cuts and borrowing from the “Rainy Day” reserve accounts were necessary to keep the budget balanced.
And, as we taxpayers are aware, state government spending tends to increase to swallow up any boosts in revenue. As collections increased during the past decade, annual spending also shot up by about $1 billion.
Halfway through the current fiscal year, the general revenue budget shows spending $33.3 million in excess of revenue collections. Gov. Jim Justice and legislative leaders seem confident the situation will improve.
Still, discretion is the better part of valor, so the governor is proposing what he calls a “flat” budget for next year, of $4.58 billion. Good.
At first glance, the budget may seem substantially lower than this year’s $4.71 billion — but remember, that figure includes two big one-time expenditures. They are a $105 million transfer to the Public Employees Insurance Agency and $104 million to the Division of Highways.
Moving forward, however, it is clear state officials need to do more to tighten government’s belt. More money for road maintenance will always be needed. And the PEIA at some point will use up that $105 million.
Without new efficiencies in government, West Virginia’s budget will never build up surpluses on the scale needed for really big initiatives, such as those to grow our economy. We will merely continue treading water as we have for so many decades. That is not an appealing prospect.