The Register-Herald, Beckley, West Virginia


July 15, 2010

State finances

Managing the budget a delicate balancing act

BECKLEY — Is it the calm before the storm?

West Virginia ended the fiscal year June 30 in the black, despite a decline in tax revenue. Mid-year cuts and higher demand for coal helped the state compile a $90 million surplus, which could be about $10 million less after bills are paid. Most states, still feeling the effects of the recession, would love to have those numbers.

But Deputy Revenue Secretary Mark Muchow warns of possible stormy conditions ahead.

“We had a little mini boom in the end of the year in severance tax,” Muchow said of the $4 million increase in coal severance tax revenue.

“It’s a delicate type of situation because, while we do have some positive markets out there for coal, we have some pretty strong headwinds in terms of permitting, so it’s going to be a very difficult environment in terms of forecasting the coal industry in coming years.”

Muchow, of course, was referring to the federal Environmental Protection Agency, which not only is holding up around 20 pending surface mine permits in West Virginia, but is proceeding with plans to revoke a permit issued three years ago for Arch Coal’s Spruce No. 1 mine in Logan County, where coal is being produced, miners are working and tax revenue is being generated.

The Manchin administration and the legislative leadership, dating back to the fiscally conservative tone set by former House Speaker Bob Kiss, are to be commended with taking the necessary steps, in terms of fiscal responsibility, to ensure that West Virginia keeps its financial head above water at a time when other states are facing massive debt and cutting services and employees.

But we also know that could change in a heartbeat. As long as the EPA is ratcheting up restrictions on the permitting process and regulations, it will become a trickier balancing act.

Not only would such EPA action adversely affect coal severance tax revenue, it would impact other revenue streams, like payroll and sales taxes, just to name a couple.

That’s why it is imperative that the next U.S. senator from West Virginia be a strong leader who will not only stand up for West Virginia’s interests, but possesses the ability to convince others that this state has the resources and technology to be an important player in the nation’s future energy needs.

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