During the past week, a governor-appointed workgroup has been discussing possible changes to West Virginia’s tax system.

This long-debated topic is likely to be very widely discussed by lawmakers in the coming weeks, as we approach a fall special session on tax modernization.

At the same time, state budget officials announced that the state ended the 2005-2006 budget year June 30 with about $300 million more in general revenue than expected, with a revenue total that was 10 percent higher than the previous year.

This positive balance — the best the state has achieved in decades — came about without any tax increases.

Nearly 15 years of very careful budget management has led up to this point, and those of us within the legislative leadership are mindful of the fact that despite our prudence, the state could face a deficit within two years.

We operate under the continuous shadow of the state’s $5.5 billion public pension debt, which is only now under control because of a stringent 40-year payment plan that has increased the state’s allocation each year.

Already, this year the payment schedule required $345 million be set aside.

By 2034, the payment is to reach $724 million.

Since 2005, the Legislature and Gov. Manchin have allocated hundreds of millions more to the pension system in an effort to pay down the unfunded liability faster.

While half of the current $174 million surplus is automatically placed into the state’s Rainy Day Fund, a reserve account for emergencies such as natural disasters, much of the remainder will likely be directed toward the pension debt.

Drastically reducing the state’s pension debt is first and foremost the best way to ensure a stable pension system.

But such debt reduction, along with the recent privatization of the state’s worker compensation system, provides a major step toward improving the state’s business climate.

The rising personal and business income tax revenue signals that improvement, which was bolstered by a growing energy market.

These improvements are being cited by Gov. Manchin as he presses the Legislature to consider tax revisions.

The governor has mentioned further cuts to the state food tax and reductions to other taxes, such as the business franchise tax.

Needless to say, just about every interest group in the state, particularly those representing businesses, is showing an interest in this discussion and advocating certain tax cuts.

But some lobbying interests have joined together to issue a report, “Fair Taxes for West Virginia,” urging caution.

The group, which includes the West Virginia Council of Churches, the Affiliated Construction Trades Foundation and the state chapter of the National Association of Social Workers, want to ensure that the state is careful to preserve revenue for continued investment in infrastructure, education and social services.

Many in the Legislature, myself included, have long said that any tax reductions must be properly paid for with cuts elsewhere in government in order to prevent future shortfalls that could become a drain on investments in such vital services as education.

Regardless of what action the Legislature takes this fall, the recent budgetary news is a very encouraging sign that West Virginia’s economy is headed in the right direction.

— Contact House

Speaker Kiss, D-Raleigh, by phone: (304) 340-3210; by writing: Office of the Speaker, Room M-228, Building 1, Capitol

Complex, Charleston, WV 25305; or by e-mail: castor@mail.wvnet.edu