For fiscal geeks, the Executive Budget Report is a veritable treasure trove of data, including nuggets like investments by agency, long-term bond debt, total full-time equivalent positions by agency, total list of active tax credits, a summary of long-range financial issues, and so forth.
One key element of information is inexplicably absent from the 2021-22 Executive Budget Report, that being the six-year financial plan, which lists expected revenue and expenses for the current budget year, and for the upcoming Budget Bill year, and also provides an outlook projecting revenue and expenses for the next four budget years.
Why the outlook, one of the most significant elements of the Budget Report, is missing is unclear. Officials from the Department of Revenue or state Budget Office did not respond to inquiries regarding the absence of the report.
One clue may come from the 2020-21 Budget Report, which does include a six-year financial plan.
That report projected that the state was on pace to end the 2019-20 budget year on June 30, 2020 with a $2 million budget surplus.
In reality, because of economic slowdowns and stay-at-home orders mandated because of the COVID-19 pandemic, Gov. Jim Justice had to issue a series of executive orders on June 30, sweeping some $198 million of unspent funds from various accounts in order to close a budget shortfall.
The 2020 plan projects that, for the 2020-21 budget year, the state will be able to use one-time appropriations to close a projected $165 million budget gap and balance the budget on this June 30.
However, for each of the out years, the financial plan projects budget deficits of more than $150 million each year.
That includes a $170.09 million shortfall for the 2021-22 budget year, which begins July 1 and is the subject of the current Budget Bill, followed by a $157.89 million shortfall in 2022-23, a $171.44 million shortfall in 2023-24, and a $164.33 million deficit for 2024-25.
“We continue to approach current and future challenges that includes increases to state appropriations for the state’s social programs, PEIA, education, continued retirement contributions, and deferred maintenance for state-owned property,” the six-year plan narrative states.
On the day the 2021-22 Budget Bill was introduced, and the accompanying Executive Budget Report was released, Justice in his State of the State address called for a phase-out of the personal income tax, beginning with a 50% reduction for lower tax brackets, and a one-third reduction for the maximum, 6.5% tax bracket.
Income tax is by far the largest single source of state revenue, accounting for more than 43% of the state general revenue budget.
Since the Budget Report cannot assume that tax cut legislation will be enacted, it includes historical information about income tax collections, as well as projections through the 2025-26 budget year — projections that assume no changes to tax rates.
In 2018-19, income tax collections totaled $2.09 billion, accounting for 44% of that year’s $4.75 billion general revenue budget. In 2019-20, income tax collections fell to $1.95 billion, 43% of the $4.49 billion general revenue budget.
For the current budget year, income tax collections are projected at $2.15 billion, 47% of the $4.57 billion general revenue budget.
For the upcoming 2021-22 budget year, income tax collections are projected to fall to $2.04 billion, or nearly 45% of what is projected to be a $4.57 billion general revenue budget. The general revenue budget is projected to stay flat at $4.57 billion in 2022-23, with income tax increasing slightly to $2.09 billion, or 46% of the total.
In 2023-24, the budget is projected to grow to $4.77 billion, with income tax collections of $2.24 billion making up 47% of the total. In 2024-25, projections are for income tax collections of $2.35 billion, or 47% of a $4.93 billion budget.
Finally, for 2025-26, the Budget Report projects income tax collections of $2.45 billion, 48% of a $5.095 billion general revenue budget.