In spite of efforts to avoid it, including mid-year budget cuts and budget transfers, West Virginia conclude fiscal 2017 in the red. The state is also beginning fiscal 2018 with a deficit of $11.0 million.
While the state brought in more revenue than expected in June, it wasn’t enough to offset the rest of the year, ending the fiscal year with a shortfall of just below $21.0 million. This hole comes after a special transfer of nearly $100.0 million into the general revenue fund and a transfer of $464.0 million from video lottery proceeds.
For fiscal 2017, business and occupation tax collections were $3.0 million short of what the state had projected.
The source of the biggest budgetary shortfall was income tax revenue, which was $100.0 million below forecasts. Meanwhile, sales revenue was more than $62.0 million below estimates and corporate income tax collections came in roughly $21.0 million under forecast.
Overall, state revenue collection for fiscal 2016-17 came up short of estimates at $4.16 billion.
Nick Casey, chief of staff to Governor Jim Justice, blamed the $11.0-million shortfall on the Legislature for relying on “fake money” to balance the 2017-18 budget.
Through a combination of spending cuts and $123.0 million in one-time funds, which includes $40.0 million from the state’s “rainy day” emergency reserve, Virginia actually carried over a $30.0-million surplus into the new fiscal year, which started on July 1. But in order to balance the 2017-18 budget, the state Legislature erroneously presumed there would be a $41.0-million surplus. This immediately created the $11.0-million shortfall.
Since the budget was written based on the higher surplus projection, “We started the year $11 million in the hole,” Casey said.
Instead of having a surplus that was supposed to help fund the Department of Health and Human Resources and volunteer fire departments, residents of the “Appalachian State” have been told to expect cuts to public service departments.
The West Virginia Department of Health and Human Resources and volunteer fire departments will be the first to face reductions. The annual stocking of creeks and rivers for fishing, fairs, and festivals will also be vulnerable to cutbacks.
Culture and History will be hit hard, with its budget cut about 12%. Lottery funding from various Culture and History program grants could be cut by 20%. Likewise, funding for a number of theaters and symphonies would be cut by 20%.
The Division of Tourism is expected to see its advertising budget fall 67% from $7.42 million to $2.42 million. Governor Justice had argued that the state should try and copy Michigan, which saw its tourism soar after increasing its tourism advertising budget to launch the “Pure Michigan” campaign. His pleas fell on deaf ears.
“Governor’s Proposed FY 2018 Budget,” West Virginia State Budget Office, last accessed July 13, 2017.
“West Virginia ends fiscal year in the red,” The State Journal, July 12, 2017.
“Proposed WV budget includes deep cuts to education, arts, tourism,” West Virginia Gazette, June 20, 2017.