Thursday, February 20, 2014

Budget battle brewing at Capitol


Governor Tomblin, administration officials and Democrat legislative leaders huddled behind closed doors at the Capitol Wednesday to confront the growing challenge of how to fill a hole of at least $180 million in next fiscal year’s budget.
The meetings ended with no consensus on how to make up the shortfall, which is putting increasing pressure on state leaders to make tough budget decisions as the legislative session winds down.
Tomblin’s proposed budget is balanced based on cuts in spending and passage of six bills, including one controversial measure that would take $39 million in lottery profits designated for cities, counties, thoroughbred and greyhound breeders and shift the money to the General Fund.
The proposed budget already includes dipping into of the state’s emergency savings account–the Rainy Day Fund–for $83 million, and now officials believe they will have to go much deeper.
Senate Finance Committee Chairman Roman Prezioso and House Speaker Tim Miley both say it may take up to $200 million out of the fund to balance the 2015 spending plan.
The fund was created in 1994 and now holds $920 million.  The fund is designated for emergencies, such as flood assistance, but its solvency also preserves a high bond rating for the state.  If approved, this will be the first time the Rainy Day fund will have been used to balance the budget.
The Governor and House and Senate leaders are also considering new revenue. The possibilities including raising the 55-cent a pack cigarette tax and a temporary increase in the six percent sales tax.   Many Democrat lawmakers fear that raising taxes will hurt them at election time.
The indecision among Democrats has prompted some to call for a rare joint House-Senate Democratic caucus to see if the majority party can reach consensus .
Balancing the budget has become increasingly difficult the last few years as the coal industry has slowed, gambling receipts have declined and Medicaid costs have increased.  Tomblin imposed a hiring freeze and spending cuts this fiscal year and more are proposed for next year.