SOUTH CHARLESTON, W.Va. — The budget cuts previously called for by the governor have helped balance the next budget proposal, and any resulting pain to agencies or programs won’t include layoffs, the state’s budget director said Thursday.
Gov. Earl Ray Tomblin has called for all state agencies to slash 7.5 percent, though large spenders including K-12 — not higher higher education — and corrections were spared. That amounts to $75 million in cuts to Tomblin’s 2013-2014 proposal, Budget Director Mike McKown said. While that’s less than 2 percent of West Virginia’s general revenue spending, the cuts also help future budget-setting by permanently reducing basic state spending, he added.
McKown was among several speakers who discussed the budget at The Associated Press’ annual Legislative Lookahead forum, hosted by Marshall University’s graduate campus. Tomblin told the forum earlier that he remains opposed to new or increased taxes. The governor also said his proposed budget and legislative agenda will address findings in recent, separate studies of the state’s public schools and its inmate crowding crisis.
Medicaid drives much of the state’s looming budget troubles, McKown said. He estimated that every 1 percent drop in federal funding for that health care program, mostly triggered by improving personal incomes, means the state must find another $30 million to keep it at current levels. West Virginia also faces a call from the federal health care overhaul to open Medicaid to more of the working poor. Tomblin said Thursday that he’s awaiting an audit of the program before he decides how or if to expand it.
The faltering coal sector also plays a role, Deputy Revenue Secretary Mark Muchow told the forum. Strong demand and prices buoyed state finances during the depths of the Great Recession, Muchow noted. But the industry recently suffered a 27 percent drop in production. He blamed a struggling global economy and electrical utilities shutting down mostly older coal-fired power plants while turning to cheaper natural gas, among other factors. Revenues from severance taxes, on coal as it’s mined, have plummeted as a result, Muchow said.
House Finance Chair Harry Keith White echoed Muchow’s concerns about the worsening coal sector.