Paying for 5 percent across-the-board pay raises for teachers, school service personnel and other state employees without raising taxes or fees will require cutting the proposed 2018-19 state budget by at least $82 million — cuts legislative leaders said Tuesday will include wiping out all or the most of the funding increases requested by Gov. Jim Justice.
On Tuesday, Senate President Mitch Carmichael, R-Jackson, said of the new budget plan, “It will maintain current funding levels without increases that the governor had sought.”
In a compromise reached Tuesday for passage of the 5 percent pay raise bill for school employees and State Police (House Bill 4145), Senate leaders said they will not use any of Justice’s $58 million increase in 2018-19 revenue estimates to fund the pay raises, instead relying on cutting spending in the new budget, primarily aimed at funding increases Justice sought in his budget plan submitted to the Legislature on Jan. 10, including several key funding increases:
- $35 million for the Department of Commerce, to promote various economic development initiatives. Officials with the state Development Office sought the increased funding for business and industrial site readiness and for strategic investments necessary to “close the deal” with businesses considering locating in the state.
- $14 million for the Division of Tourism, to nearly triple the division’s annual budget, to greatly expand state tourism advertising and marketing.
In his State of the State address, Justice called both funding increases critical to the state, saying, “We have got to market ourselves.”
Reiterating a common theme, Justice said repeatedly seeing commercials promoting states such as New York and Michigan, with no ads for West Virginia, drives him crazy.
“Someway, somehow, we’ve got to let the world know how good we are,” he said of the value of state tourism advertising.
- $23 million for the General Services Division, to fund state buildings in dire need of repair after years of deferred maintenance.
Budget Office Director Mike McKown said of that funding request, “The roofs are not fixing themselves.”
- $7 million to provide a free tuition program for students attending state community and technical colleges. Legislation to create that program, also strongly advocated for by Carmichael, passed the Senate unanimously on Jan. 31, but Senate Bill 284 has not been taken up in the House.
Erasing those increases would provide $82 million for pay raises and increases in benefits contributions. House Speaker Tim Armstead, R-Kanawha, said some portions of the governor’s funding increases still might be passed, as the budget process moves forward.
“This was one of the big components of that budget that was still out there that has to be resolved,” Armstead said of Justice’s requests for funding increases.
Earlier Tuesday, Senate Finance Chairman Craig Blair, R-Berkeley, said that, in addition to cutting the governor’s requests for increased funding, the pay raises would require a $20 million reduction in current spending, which he said would come from General Services and Medicaid, the state-managed health plan for the poor, disabled and elderly.
In a bill-signing ceremony Tuesday afternoon, Justice said of Medicaid funding, “There’s not a chance on the planet that’s what we’d cut.”
He later said it might be necessary to cut the $720 million appropriation for Medicaid by no more than $10 million, funding he said could be restored in the course of the budget year, if his increased revenue projections are accurate.
“I absolutely believe with all in me those are rock-solid numbers,” he said, suggesting Senate leadership’s refusal to include the revenue in the budget plan amounts to “face-saving.”
In the current budget year, Medicaid has $163 million in unexpended funds, which state Budget Office officials attribute to overestimating costs of expanding Medicaid to cover people with incomes of up to 138 percent of the federal poverty level.
“I will not allow our people on Medicaid to suffer in any way,” Justice said.
Justice said he’s amenable to spending cuts to fund the pay raises, since many of the cuts could be backfilled with supplemental appropriations if his revenue estimates prove to be accurate.
“From my standpoint, I don’t have a problem with that because I know the money’s going to be there,” Justice said.
In announcing a proposal on Feb. 28 intended to end the teachers’ walkout by giving teachers and school service personnel 5 percent pay raises, with 3 percent pay raises for other state employees, Justice increased his $4.35 billion 2018-19 revenue estimate by $58 million. That was based on projected increases in sales tax and income tax collection spurred by an upswing in highways construction, spurred by pending sales of road bonds, and by federal tax law changes.
Blair on Tuesday called the revenue projections “suspect.”
Meanwhile, leadership in both houses are pressing forward with a timetable to pass the budget bill before the 60-day regular session ends at midnight Saturday, something that hasn’t happened in decades.
“We anticipate the budget being passed before the end of the 60-day session,” Carmichael said, adding, “This Republican-led Legislature would be the first to deliver a budget in that time frame in a long time.”
Traditionally, House and Senate conferees completed work on the budget bill during a brief extended session, in order to incorporate legislation passed at the end of the regular session that includes expenditures.
However, for the past two years, severe budget shortfalls have resulted in extended impasses that resulted in the budget process dragging on into June each of those years, ahead of the new budget year that begins each July 1.