West Virginia state agencies are being asked to cut a total of $100 million from this year’s budget, and to reduce next year’s budget as well.
With state tax collection falling short of projections for the first three months of this budget year, which began July 1, Revenue Secretary Dave Hardy said Gov. Jim Justice has directed the department to prepare for the $100 million state spending cut.
“We have held 21 budget hearings with state agencies over the last two months and asked their leaders to identify potential areas for budget cuts, in the event the cuts are necessary,” Hardy said in a news release Friday.
In an interview with the MetroNews radio network Friday morning, Hardy sounded like the cuts will be necessary.
“The governor said do not wait until this becomes a big problem,” he said.
Through September, state revenue collection has run nearly $30 million below estimates, primarily because severance taxes on coal and natural gas have slumped severely, running a $26.4 million shortfall.
Earlier this year, Justice led the charge for state lawmakers to pass a cut in the coal severance tax from 5 percent to 3 percent, a move estimated to cost the state about $60 million a year.
Deputy Revenue Secretary Mark Muchow has blamed downturns in coal exports and natural gas prices, along with court actions blocking construction of two major natural gas pipelines because developers didn’t follow proper procedures, for turning 12 percent revenue growth in 2018-19 into a deficit early in the 2019-20 budget year.
Hardy said Friday that it’s better to build cuts into the budget early on, so funding can be restored if the economy turns around later in the budget year.
“It’s just us getting ahead of the numbers,” he said in the news release.
State agencies generally begin putting together budget requests for the next budget year in August and September of the prior year.
A $100 million cut would represent just over 2 percent of the state’s $4.67 billion general revenue budget.
Kristin Anderson, the state Department of Education’s communications executive director, wrote in an email Friday that “state agencies were just given information today” regarding the looming possible budget cut.
“Our finance office is working to analyze the budget and we have not come to any final conclusions as of today,” Anderson said. “As with all reductions, our goal is to be strategic and thoughtful.”
At the past two legislative sessions, striking public school workers have chanted in favor of increasing the severance tax on natural gas. State lawmakers didn’t comply.
During the summer, Justice and lawmakers approved an omnibus education bill (House Bill 206) that provided tens of millions of dollars annually for public education, including teacher pay raises and more school counselors and social workers.
Also, lawmakers — generally following a recommendation from Justice’s Blue Ribbon Commission on Four-Year Higher Education — raised state appropriations for four-year public colleges by more than $10 million this fiscal year.
Matt Turner, executive vice chancellor for administration for the state-level agencies that oversee colleges, wrote in an email that “the colleges and universities will determine how they absorb any mid-year budget cuts directed by the Department of Revenue.”
“Once we get specific direction on the cut, we will have more information about the impact,” Turner wrote. “But we have already asked the college presidents to plan on a 4.6 percent mid-year reduction and we are now asking them to provide us their plans for absorbing that cut, as well as how they would deal with a [fiscal year] 2021 reduction from their [fiscal year] 2020 initial level.”
The Washington, D.C.-based Center on Budget and Policy Priorities think tank said this week that, adjusted for inflation, West Virginia’s per-student higher education funding dropped by about 24 percent from 2008 to 2018.