CHARLESTON, W.Va. -- Unlike many states, West Virginia did not furlough state employees, raid pension funds, borrow money to pay day-to-day expenses, or spend down Rainy Day funds set aside for emergencies, state Budget Director Mike McKown told legislators Wednesday.In fact, the state finished the 2011-12 budget year June 30 with an unappropriated budget surplus of nearly $88 million.And that's after the Legislature appropriated $67.5 million of surplus into the 2012-13 state budget, and after $28.17 million of surplus was transferred to the state Rainy Day Fund."We, as a state, are performing better than most," McKown told a joint Finance interim committee. "We've tried to budget conservatively, and we've tried to look down the road."While legislators will return to Charleston in February with a budget surplus, as well as a total of $477 million of re-appropriated funds -- funds in various accounts that weren't spent during the 2012, budget year -- the work to put together a 2013-14 budget will be more difficult than recent budget bills, McKown said."We really have some challenges ahead of us in the coming year, particularly because of Medicaid," McKown said."Medicaid is going to require $100 million of new appropriations, just to keep at the current level," he said.That's in part because the federal match for the state-administered health-care program for the poor, elderly and disabled has dropped, and because the state emptied its Medicaid Trust Fund, and has spent all federal stimulus funds available to keep the program funded through June 30, 2013.That's why many state agencies were asked to build 7.5 percent spending cuts into their 2013-14 budget requests they submitted to the Budget Office earlier this month, he said.Other highlights from the 2012-13 budget:* State Road Fund collections of $665.6 million were $2.29 million better than 2010-11, and $43.1 million over projections for the year, primarily because the privilege tax paid on vehicle purchases came in 23 percent above estimates, at $186.29 million.* Although the total general revenue appropriation in the 2011-12 budget was $4.01 billion, agencies spent $3.88 billion of that amount. Of the unexpended funds, $121 million were reappropriated into the agency's 2012-13 budgets, while $11.36 million was swept from the accounts and moved into surplus funds.* The state's share of state Lottery revenue of $608.77 million was $81.6 million over estimates. Budget officials had expected state revenues from the state's racetrack casinos to fall nearly $16 million from 2010-11 figures, as new competing casinos were expected to open in Ohio.Instead, Lottery revenues from the racetrack casinos actually improved $17.7 million over the previous year, as the Ohio casinos either opened very late in the budget year, or are still under construction."We thought Ohio would be 100 percent up and running now, and they're not," McKown said. "They're just coming on board."Meanwhile, revenue from limited video lottery in bars and clubs around the state came in $46.5 million, or 22 percent, above estimates.In fact, with roughly 7,400 machines, video lottery produced $262.4 million of revenue for the state, not far behind the $271.59 million of revenue produced by nearly 14,000 racetrack slot machines.| The state's two Rainy Day funds currently contain $883 million. McKown said that's equal to 21 percent of the general revenue budget, and the third-best funded Rainy Day fund in the U.S. However, he noted that in the event of a major emergency, with little or no tax revenue coming in, it would be enough to keep state government running only for a matter of weeks."While that's a big number, it's really only 2 1/2 months of expenditures," McKown said.Reach Phil Kabler at email@example.com or 304-348-1220.