The 2014 session of the West Virginia Legislature that begins in two weeks will be difficult but illuminating as lawmakers wrestle with the real-world implications of an estimated $80 million budgetary shortfall.
Much of the deficit is due to restructuring of state government revenue flows that helped ease the burden on the poorest of our neighbors, such as expanding Medicaid and halving the state sales tax on food items.
About half the budgetary shortfall, state Sen. Daniel Hall, D-Wyoming, told The Register-Herald, is due to reducing the state sales tax on food.
“Lowering the food tax has hurt,” he said, but acknowledged that government returning tax revenue to constituents when possible is the right thing to do.
The best way to offset such a deficit is for our economy to rebound, refilling both family bank accounts and rejuvenating state sales and other tax collections.
But there are no projections for such an economic turnaround for West Virginia in the near future.
Another way to deal with that $80 million number is to raise taxes. But wary lawmakers say it is unlikely that is the path they will take.
“I don’t think we’ll raise taxes,” Hall said. “The governor has made it clear he doesn’t support a tax increase.”
With no new taxes, that means tough decisions must be made on funding current state programs. Where do you cut, and how much?
The direction the Legislature will take in the coming year will be based in large part on the priorities set by Gov. Earl Ray Tomblin when he gives his State of the State message on Jan. 7, the day before the new legislative session begins.
Tomblin, a Democrat, has made it a priority to make the state more competitive when it comes to attracting new business and expanding the businesses here now.
In that respect, the governor has been an unquestioned success. West Virginia now ranks 23rd nationally in the nonpartisan Tax Foundation’s 2014 State Business Tax Climate Index. Ten years ago, West Virginia ranked 47th nationally.
“We have made it a top priority to reduce the tax burden on businesses,” Tomblin was quoted earlier this year on the website of the West Virginia Department of Commerce. “We have enacted a phase-down of our corporate net income and business franchise tax rates, and businesses are seeing a better bottom line when choosing West Virginia.”
Making the state more enticing to businesses seeking to relocate will eventually mean more jobs and more state tax revenues. But the results of this improvement in the state’s attractiveness to new businesses will take time.
That leaves cutting or paring back current state expenditures.
Lawmakers are considering a number of paths to take, including entering agreements with private prison companies to house inmates out of state. Since prisoners would have to voluntarily opt-in to the program to be moved out of state, we see this as a potential way to create significant savings for West Virginia
We hope lawmakers, after debate, find that this is a viable option to save money and also to help alleviate prison overcrowding.
Education has been another priority of both Tomblin and the Legislature, and as usual is a factor in the debate over state spending priorities for 2014 as well.
The average pay for a state teacher is about $45,000 a year, which ranks around 48th in the nation. The national average for teacher pay per state is $55,000 or so, and most teachers in neighboring states earn more than those in West Virginia. However, a $1,000 increase in salary for each of the state’s teachers would cost $46 million annually, according to the West Virginia Education Association, a teachers union affiliated with the National Education Association.
Christine Campbell, president of the American Federation of Teachers-West Virginia, another teachers union, says the AFT wants a long-term package that “brings us something reasonable.”
Campbell, not surprisingly, left the definition of “something reasonable” a bit vague.
When state bank accounts are bursting with cash, it’s easy to find worthy programs on which to spend those monies. As we noted in the beginning, it is in times of budgetary shortfall when our core priorities are revealed.
We look forward to the coming debate.