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WV budget shortfalls result of downturn in coal exports, gas prices, pipeline jobs

Sharp downturns in coal exports and natural gas prices, along with court actions halting construction of two major natural gas pipelines, have pushed the 2019-20 West Virginia budget into a deficit early on, Deputy Revenue Secretary Mark Muchow told legislators Monday.

Muchow said the budget assumed a 1.2 percent downturn from record tax collection of $4.75 billion in 2018-19, but finished the first two months of the budget year down 6.8 percent from the same point last year.

Muchow blamed the current $49.8 million budget shortfall on a 50 percent drop in coal exports, a 48 percent drop in natural gas prices and the loss of 4,000 gas pipeline construction jobs.

“The energy sector is pretty soft right now,” Muchow told the interim Joint Committee on Finance.

Most of the year-to-date revenue shortfall comes down to severance taxes missing estimates by $26.8 million and personal income tax collection coming up $21.78 million short, because of the downturn in high-paying construction jobs, he said.

He also said steel production has dropped nationally, reducing demand for metallurgical coal.

Muchow said part of August’s $16.8 million shortfall was a timing issue, with the last day of the month falling on a Saturday, meaning that a lot of taxes due on the 31st will show up as September revenue.

“I think the numbers in September will be closer to estimates than they are today,” he said, adding, “That will help cut into the shortfall for the year-to-date.”

However, he said softness in the energy sector is likely to persist long-term.

Muchow said state agency heads have been asked to propose 4 percent midyear spending cuts, in the event revenue collection continues to fall below estimates.

He stressed that the cuts would be worst-case scenario, and said preparing midyear cuts is an exercise most agency heads have gone through on repeated occasions.

“Our agencies have been used to midyear budget cuts,” he said.

Also Monday, Amy Willard, director of school finance for the state Department of Education, put the cost of the omnibus education bill passed in June at $134.1 million a year.

The largest cost will be $62.7 million per year for 5 percent, on average, pay raises for teachers and school service personnel, along with a $5 million-a-year increase in pension fund contributions to account for higher future retirement benefits.

Willard said some of the cost figures are “guesstimates,” such as the $2.1 million a year cost to provide $500 bonuses to teachers who use four or fewer personal leave days each year.

Reach Phil Kabler at

philk@wvgazettemail.com, 304-348-1220

or follow @PhilKabler on Twitter.

Funerals for Saturday, December 14, 2019

Akers, Trela - 1 p.m., Tyree Funeral Home, Mount Hope.

Cochran, Jacob - 3 p.m., Gatens-Harding Funeral Home, Poca.

Cosby-Matthews, Hattie - Noon, First Baptist Church of Charleston, Charleston.

DeMarino, Jane - 1 p.m., John H. Taylor Funeral Home, Spencer.

Gunther, Jewell - 1 p.m., Calvary Baptist Church, Chapmanville.

Hall, Betty - 1 p.m., St. Andrew United Methodist Church, St. Albans.

Holbrook, Linda - 1 p.m., St. Andrew Presbyterian Church, Pinch.

Johnson Jr., Delbert - 11 a.m., Allen Funeral Home, Hurricane.

King, Edna - Noon, St. Christopher Episcopal Church, Charleston.

Kiser, Kenneth - 6 p.m., Cunningham-Parker-Johnson Funeral Home, Charleston.

Lawrence, Mamie - 2 p.m., O’Dell Funeral Home, Montgomery.

McCutcheon, Alice - 1 p.m., Old Greenbrier Baptist Church, Alderson.

Mills, Melinda - 5 p.m., New Baptist Church, Huntington.

Rannenberg III, Thomas - 2 p.m., Keller Funeral Home, Dunbar.

Ray, Sandra - 1 p.m., Crooked Creek Church of Christ.

Roach, James - 1 p.m., First Baptist Church, Ravenswood.

Tyler, Gloria - Noon, Grace Bible Church, Charleston.

Ulbrich, Sandra - 11 a.m., Handley Funeral Home, Danville.

Williams, Laura - 2 p.m., Stockert-Paletti Funeral Home, Flatwoods.

Wood, Ruby - 11 a.m., Good Shepherd Mortuary, South Charleston.