Gov. Justice Outlines Multifaceted Plan To Fix Budget Hole, Spend Federal Coronavirus Aid

Jun 26, 2020

Gov. Jim Justice says his office has found a way to cover what’s expected to be a $250 million budget hole. The governor rolled out the plan in a midday meeting with top lawmakers on Friday before releasing it to the general public.

In a virtual news briefing, Justice outlined the state’s financial situation, which has been negatively impacted by the coronavirus pandemic. His plan routes federal aid dollars to various state agencies and pulls from the Medicaid surplus fund to cover the budget gap. 

For weeks, Justice has said he believes federal aid would become available for states to backfill budget shortfalls related to the coronavirus pandemic. Although federal rules released alongside the CARES Act explicitly prevent that from happening, the governor’s office plan appears to replace already allocated state dollars — now being spent on response to the coronavirus — with the federal aid.

Justice said Friday some funds that were already dedicated to state agencies will be replaced by nearly $1.25 billion from the federal CARES Act. Justice explained that the funds from the CARES Act will be directed to local governments, small businesses, local public service districts, highways, hospitals and for unemployment benefits. 

Additionally, $150 million from the state’s Medicaid surplus will be directed to the general revenue budget. 

“We have CARES money and we have other grant monies that have come into West Virginia,” Justice said, noting that more than $2.2 billion in federal coronavirus aid has so far come to the state. “And we've got to find the right — the appropriate — places to put it up.”

During the press briefing, Justice’s general counsel Brian Abraham said the state sought out an outside consultant to make sure the governor’s office had the authority to use federal money to cover the general revenue budget. 

State lawmakers from both parties said the plan was explained to them in Friday’s meeting. Some Democrats expressed frustration over not being able to offer input on the budget situation. 

Sen. Roman Prezioso, D-Marison, said the governor arrived about 40 minutes late to the meeting with lawmakers. Prezioso, who attended the meeting virtually, said he and other Democrats invited to the meeting wondered why the financial plan doesn’t fall under the Legislature’s purview. 

“He's not gonna muck it up with a special session,” Prezioso said of the meeting with Justice and proposed budget fix. “He's said he's not going to have a food fight by bringing the Legislature in.”

Senate President Mitch Carmichael, R-Jackson, described the meeting as “informational” and said lawmakers did not offer input on the plan. 

“We accommodated the governor's request to go meet for the purpose of him explaining his views on spending the CARES money and getting through June 30 and the fiscal year,” Carmichael said, “That was something initiated by the governor's office.”

Carmichael, who lost a primary election earlier this month, will hand over the gavel when the Legislature returns for its next regular session in February. But as the current leader of the upper chamber, he said he feels as though the Legislature should have control over how the state’s money is spent. 

“I always think that all expenditures should be made by the Legislature and allocated by the Legislature. I've always felt that way,” Carmichael said.  “And now, my understanding is that the CARES Act — and those legal opinions that the governor's office has provided — that enable governors to have wide discretion on the manner in which this money is invested and spent.”

Justice said the state is expected to wind up with a $10 million surplus once the new fiscal year begins on July 1.