When West Virginians face tough financial times at home, they cut back and live within their means. As a successful small business owner, I constantly focus on controlling my costs so that we don’t outspend our revenues while still paying our bills. While these seem like practical principles for budgeting, they definitely seem to be lost in Charleston.
Our state’s General Revenue budget has grown by more than 55 percent in the last 16 years. Year after year, the Department of Revenue has overestimated revenues when the Governor prepares his budget. That inflated number is what allows the Governor to present a “balanced” state budget that our Constitution requires.
However, that presents a problem for the Legislature, which is responsible for coming up with the actual budget that spends within our means. If your revenue projections are overstated, you don’t even get to start with a solid base. We spend to the revenue number, and if that revenue number is off by 10 percent like it was this year, it’s easy to see where the problems begin.
We have to begin with a real number. That’s the bottom line. Our revenue estimates simply have to be more accurate in order to allow the Legislature to do its job in creating a balanced budget. A real balanced budget, not a budget with holes that would be filled by “maybes” and hypothetical revenues.
For far too long, our state and local governments have been dependent on revenue from coal severance taxes. Unfortunately, the war on coal has placed an incredible strain on our current budget. Severance taxes continue to come in well below projections, leaving the state with a serious structural budget deficit that is approaching $400 million.
Governor Earl Ray Tomblin made a wise choice by cutting spending by 4 percent across the board to deal with the problem in the short term. However, in January when he proposed his Fiscal Year 2017 budget, he offered the Legislature a budget that called for increased spending that relied on two new taxes: a tobacco tax increase and a 6 percent tax on residents’ phone bills.
Like families and businesses across our state, we must get our fiscal house in order by reducing state spending before we ask West Virginia taxpayers to pay more. Currently, we are not even controlling the growth of our state government. We can’t continue with across-the-board budget cuts to deal with our structural deficit.
Our state needs strong leadership to make tough choices and develop a budget that addresses the deficit by reducing expenses in a responsible, targeted fashion without hurting important programs. This fiscal crisis demands a leader that can make tough choices and work with the Legislature to pass a budget that protects our citizens, yet stays within our actual means.
Fortunately, West Virginia has a very healthy savings account. This $784 million Revenue Shortfall Reserve Fund is specifically designed to help get us through difficult times. When a family suddenly finds itself with an income loss or unexpected event, it turns to its savings account to help it through the rough patch and to meet its obligations. This “rainy day fund” is the taxpayers’ savings account, and it’s there to help the taxpayer by meeting our needs without raising taxes. While it would be irresponsible to simply raid the fund to close the entire budget shortfall, it may be necessary for us to draw on some of these reserves to help meet the unrealistically high revenue projection the Governor has set in his budget.
In the coming days, my fellow lawmakers and I will work to prepare a budget that will allow us to live within our means while addressing the state’s structural problems.
West Virginia’s future is far too important to delay action. We must give our citizens faith that they won’t lose more of their hard-earned money to an unnecessary tax hike or lose the education, public safety, and health care services they need. I, and the rest of the Legislature, stand ready to work, and I hope Governor Tomblin will join us.
Senate President Bill Cole, R-Mercer, represents the Sixth Senatorial District, which includes Wayne, Mingo, McDowell and Mercer counties.