The Times West Virginian

West Virginia

March 15, 2014

Lawmakers pass budget relying on reserves

Republicans concerned about setting precedent

CHARLESTON — The West Virginia budget approved by lawmakers Friday dips into millions of dollars in reserves and gives public employees raises.

The Senate voted 25-9 and the House of Delegates voted 77-18 to pass next year’s budget. The proposal would take $147.5 million from the state’s $922 million Rainy Day Fund to cover a projected shortfall.

A secondary bill that passed Friday will free up another $21 million from greyhound and horse racing casino subsidies, and water and sewer infrastructure money, among other sources.

The last-resort account is considered one of the country’s strongest, and lawmakers haven’t used it to fill a budget hole before.

“The Rainy Day Fund was created for when we hit a rough spot and to cover these times we might have a shortfall,” said Delegate Tim Manchin, D-Marion. “Instead of taking drastic measures with cuts, we are using the Rainy Day Fund.”

Several Republicans were concerned about setting a precedent by tapping into the reserves, which must be maintained at a certain level to keep positive bond ratings.

“Now we are taking a very significant step backward,” said Minority Leader Del. Tim Armstead, R-Kanawha. “We are borrowing to balance this budget from an account that was there for other reasons than for us to plug these holes.”

The budget’s passage ends a week of closed-door negotiations among the House, Senate and Gov. Earl Ray Tomblin to make the 2015 budget balance, as the law requires.

The plan includes $1,000 across-the-board raises for teachers, 2 percent raises for school service personnel and $504 raises for public employees. Officials say starting teacher salaries need to be more competitive with West Virginia’s neighboring states.

County elected officials also are due a pay increase under a bill lawmakers passed Friday.

House lawmakers, who face re-election this year, opposed increasing the cigarette or sales taxes.

House Democrats hold a slim six-seat edge over Republicans. In West Virginia’s traditionally Democratic Legislature, Republicans haven’t controlled the House since 1928.

The budget adds $5 million for a Medicaid program that offers seniors in-home care. It also strips $9 million from the attorney general’s consumer protection program.

“During difficult economic times, every office must do its part to put the taxpayers first,” said Attorney General Patrick Morrisey, a Republican. “By doing our part and contributing $9 million to the General Fund, the attorney general’s office is helping to reduce the amount of money the state needs to withdraw from its Rainy Day Fund.”

Lawmakers face a variety of struggles to make the numbers work. Revenue from dog and horse track casinos has dipped because of competition from surrounding states. Taxes on the booming natural gas industry haven’t offset the struggles of coal, the state’s longtime staple product.

Other problems are self-inflicted, lawmakers say. A recent cut on grocery taxes, tax credit on alternative fuel vehicles and a drop in the corporate income tax have eliminated millions of dollars in revenue. Officials say the alternative fuel credit for cars could cost the state $100 million.

Gov. Earl Ray Tomblin will now consider line-by-line vetoes in the spending plan.

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