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West Virginia Ends Fiscal Year 2020 With Surplus In State Budget

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On April 3, West Virginia Secretary of Revenue Dave Hardy told Governor Jim Justice that the state would run out of cash by May 10 due to economic repercussions from the coronavirus pandemic.

They were basically looking at a $500 million dollar hole in the budget. 

Many factors contributed to that hole, the biggest of which were income taxes being deferred from April 15 to July 15. The Department of Revenue projected that only about 20 percent of West Virginians would pay early -- that is by April 15 -- and 80 percent would wait until July. That action alone would have caused a $300 million shortfall. 

The DOR also projected consumer sales tax would fall $69 million because of people not buying as much, employment layoffs reducing income tax withholdings by $85 million, and severance tax payments being reduced by $39 million. "[The combination of these factors] would have put the state into a near crisis situation immediately,” Hardy said. 

A couple ideas were floated: should income tax refunds be slowed, state employees laid off, or should the state dip into the rainy day fund? Hardy said the governor nixed all plans and asked them to "play chess and not checkers with our state finances and determine how we could get across the finish line." 

A team made up of Department of Revenue employees, the governor and National Guards people started meeting 5 - 7 days a week to find a solution. 

From there a couple things fell into place:

They began to examine the federal Coronavirus Aid Relief and Economic Security Act and realized they could go back to March 1 and be reimbursed for many of the expenses incurred with fighting the pandemic. The Act also raised the federal match for Medicaid, which caused a surplus in the state Medicaid budget. Finally, 40 percent of West Virginians paid taxes on April 15, rather than 20 percent as the office projected. 

As a result, “we went from projecting $492 million short to a $28 million surplus,” said Hardy, a result he called “borderline miraculous.” 

Of that, half, by law, will go into the rainy day fund. Of the rest, $8 million will be unappropriated for use by the legislature and governor and $6 million will go to the Milton floodwall projects.

 

Appalachia Helth News

Appalachia Health News is a project of West Virginia Public Broadcasting, with support from Marshall Health and Charleston Area Medical Center.

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