Gov. Earl Ray Tomblin today announced an across-the-board mid-year budget cut of 2 percent for most West Virginia government agencies, a move made necessary due to the state’s General Revenue Fund falling behind by more than $87 million since July.
“This was a tough decision that stemmed from sustained budgetary challenges, but we must continue acting responsibly and taking the necessary steps to keep our state strong,” Gov. Tomblin said. “While the cuts we’re enacting will not be easy, we must ensure a balanced budget, long-term financial stability for West Virginia, and smart decisions that allow for continuity of essential services for West Virginians.”
In addition to spending cuts, which include a $11.134 million reduction to the School Aid Formula and a $25 million one-time reduction to Medicaid, Gov. Tomblin announced the state hiring freeze will continue and nonessential travel for state employees remains restricted. Legislative leaders have been briefed on the situation.
As of November 2, cumulative revenue collections were $87.4 million below estimate, with numbers revealing that Consumer Sales and Use, along with Corporate Net Income taxes, were the hardest hit in October. The cumulative deficit in General Revenue Fund sales tax collections rose to $35.2 million last month, with more than 62 percent of the shortfall attributable to July collections.
In addition to the cuts that represent approximately $59.8 million, Gov. Tomblin issued an Executive Order redirecting certain revenues, totaling $25.5 million, currently dedicated to payment of the unfunded liability of the Workers’ Compensation Debt Reduction Fund to the General Revenue Fund for Fiscal Year 17. This authority was granted to the Governor through the Legislature’s passage of Senate Bill 419 during the 2016 Regular Session. Even with this redirect, dedicated revenues continue paying down the workers’ comp debt.
“We expect these budget trends to continue, so we will be looking at additional remedies as a new budget year approaches,” said Gov. Tomblin. “Certainly, our hope is to avoid additional cuts, while both reductions and one-time revenue sources will remain on the table. My goal is to act fiscally responsibly, as we have done throughout my administration, so West Virginia is on the strongest footing possible with new transitions on the horizon.”
