The Tomblin administration believes $45 million from the state Income Tax Refund Reserve Account and $28 million in additional state budget cuts will help balance the current state budget. The administration is being forced to make the additional moves as revenue collections continue to trail off.
That tax revenue deficit is now $49 million for the current fiscal year and could grow to $70 million by the end of the fiscal year, June 30. Gov. Earl Ray Tomblin’s Chief of Staff Rob Alsop says the two moves should keep the state on track.
“We have an Income Tax Refund Reserve Account and there are several accounts where we don’t spend what we’re authorized to spend,” Alsop said Tuesday. An already announced hiring freeze for most state agencies will also remain in effect through the current budget year.
Alsop says the continuing decrease in coal production, low natural gas prices, the elimination of the federal sales tax holiday and the general condition of the national economy are all hurting West Virginia
The decision to use the reserve fund to pay state income tax refunds marks the first time the fund has been used since 2009. The $28 million spending cut bill is scheduled for a final vote in the state Senate Wednesday before moving to the House of Delegates.
Alsop says the administration is currently sticking with its revenue projections for next budget year when it’s predicted natural gas prices will begin to rise.
“We think it will come to balance where supply will equal demand, the price of natural gas will come up and coal will have a little better outlook,” Alsop said.
