Gov. Jim Justice closed a $255 million budget shortfall late Tuesday afternoon with nearly $200 million swept from unspent West Virginia account balances and by using emergency reserve money to cover the remaining gap.
He issued his orders about eight hours before the 2019-20 budget-year ended at midnight.
More than two-thirds of the money, or $186 million, came from unexpended Department of Health and Human Resources appropriations. The Legislature this spring moved $150 million of unappropriated Medicaid funds into a newly created Medicaid reserve fund. Additional money from unspent agency account balances includes $9 million from Military Affairs and Public Safety, $2 million from Education and $1 million from Commerce.
Under a second executive order, Justice will use $68.6 million of an automatic annual $70 million “loan” from the state Rainy Day emergency reserve fund. Each July 1, the state borrows $70 million from the reserve fund — which currently totals $842.76 million — to deal with cash-flow issues at the start of the new budget year. Unlike other appropriations from Rainy Day funds, the $70 million annual loan does not require legislative approval.
Justice said Friday during his daily COVID-19 briefing that his administration had a plan to close a budget gap widened by pandemic-driven shutdowns and stay-at-home orders.
“We’re going to have plenty of cash to go out to the end of the year, no problem whatsoever,” the governor said.
Through May, the budget gap was $236.5 million, suggesting that June revenue collection — which will be released Wednesday — missed projections by about $18.5 million. That follows budget shortfalls of $192.27 million in April, at the height of the COVID-19 shutdown, and of $37.65 million in May.
The transfers through the executive orders will move $266.8 million to balance the budget, which would leave a 2019-20 budget year surplus of as much as $11.8 million, something Justice predicted Friday.
“It’s not going to be much,” he said. “It’s probably going to be less than $10 million.”
Since the state must end each budget year with a balanced budget, the government finishes every year with a surplus of unappropriated funds, no matter how small.
Before issuing the executive orders, Justice had provided few details about his plan. Earlier Tuesday, spokespeople for the West Virginia Senate and House of Delegates said neither chamber had been provided with details.
“House leadership was verbally briefed during the Friday meeting at the Governor’s Mansion on how the administration plans to close out the current fiscal year budget gap, and it was similar to what the governor discussed during his [COVID-19] briefing that day,” House spokesman Jared Hunt said. “We expect the administration to provide more specific details soon.”
Likewise, Jeff Waybright, chief of staff to state Auditor J.B. McCuskey, said Tuesday afternoon the Auditor’s Office was awaiting word from the administration.
“At this time, we have not received any information from the Budget Office,” Waybright said, “but we should be hearing something in the next couple hours as to what they plan to do.”