State Reports $44.8 Million December Revenue Surplus, Upcoming Budget Picture Still Unknown

Jan 8, 2019

One day ahead of the 2019 legislative session, Gov. Jim Justice announced another month of revenue surpluses. But with proposed increases to spending and hopes to rollback some sources of tax revenue, the overall budget picture remains unclear.

 

December revenue collections surpassed estimates by $44.8 million, Gov. Justice announced at a Tuesday news conference. Now halfway through Fiscal Year 2019, the state has reported a surplus of $185.9 million.

 

“Considering where we were a couple years ago, that’s really good,” said Justice, noting a $500 million deficit ahead of Fiscal Year 2018 when he first took office in Jan. 2017.

Justice and other state budget officials have projected that this fiscal year’s surplus will grow to $300 million. However, state code dictates that half of any surplus be redirected to the rainy day fund.

Deputy Revenue Secretary Mark Muchow attributed the surpluses, at least in part, to pipeline construction and the effect of road bonding. Those effects, though, are expected to taper off -- but when and to what degree is unknown.

“The rest of this fiscal year is relatively good,” said Muchow, giving an outlook on the budgetary effect of pipelines. “But one good year does not make another year. So, next year will be a brand new year. ”

With lawmakers returning this week to Charleston to consider next year’s budget and other proposals, the surplus has been in focus.

In October, Gov. Justice and Republican leaders promised $100 million to be dedicated to the Public Employees Insurance Agency as well as an additional average 5 percent pay increase for teachers and other public employees — which would come at a cost of at least $100 million.

Other proposed legislation that would add to spending is expected be considered, including a program to make community and technical colleges free and the establishment of an intermediate appellate court system.

Lawmakers are also set to consider a rollback of the state’s manufacturing inventory tax, which would reduce revenues by up to $135 million annually. That revenue funds public education through the county school systems. Another proposal would be the elimination of the state’s tax on social security income to the tune of about $100 million in revenue.

Justice declined to provide more details on how legislative leaders would balance new proposed spending that appears to outweigh the current and projected surpluses — as well as potential reductions to revenue.

“You’re going to have to wait until tomorrow night to hear about that,” Justice said.

One revenue stream pushed by some Democrats in the weeks leading up to session appears to be off the table for Justice. While he supports medical cannabis — he signed legislation authorizing the state’s program in 2017 — Justice said he is “absolutely and adamantly opposed to recreational marijuana.”

Gov. Justice is scheduled to deliver his State of the State address at 7 p.m. where he will outline his legislative agenda.

Correction: An earlier version of this story incorrectly stated that the cost of state employee to be at least $140 million.