W.Va. gov orders midyear budget cuts

AP News
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Posted: Dec 28, 2009 5:52 PM

Midyear budget cuts are in store for all three branches of West Virginia state government to avoid a potential budget deficit now estimated at $120 million.

Gov. Joe Manchin on Monday ordered all executive branch agencies, including those headed by other elected officials, to trim general revenue spending by 3.4 percent. They have until Jan. 20 to explain how they will meet that mandate.

The Legislature and Supreme Court have also agreed to as-yet-unspecified cuts, the governor said. Legislative officials could not immediately be reached for comment Monday. A Supreme Court spokeswoman said officials there have been asked to identify potential cuts.

As with other states, the recession has weakened West Virginia's general tax revenues. The Manchin administration had estimated that those revenues would total $3.7 billion by the June 30 end of the budget year. Manchin now believes revenues will fall short of that mark by $120 million, or slightly more than 3 percent.

State budget officials warned last month of a possible $100 million shortfall. At the time, the governor had hoped to close that gap through improved savings among his agencies and programs. Manchin on Monday said the midyear cuts should help avoid program cuts or state employee furloughs.

Furloughs have already hit 16 states, while 23 states have laid off workers in the face of deficit threats this budget year, according to a December report from the National Governors Association and the National Association of State Budget Officers.

That fiscal survey found 23 states enduring across-the-board cuts, and 17 raiding emergency reserves, among other steps. All told, states cut a combined $111.8 billion before enacting their current budgets _ but shortfalls remain totaling $14.8 billion nationwide, the survey said.

West Virginia's projected shortfall comes even after the Manchin administration reduced its general revenue estimate by nearly 3 percent when compared to the previous budget year. It began December, five months into the current budget year, $13.7 million behind.

"While revenue collections in some areas have exceeded estimates, the projected surplus in those areas is not enough to make up for the shortfall in other revenue," Manchin said in a statement. "Our cash flow is still in solid shape and we are not borrowing or delaying payments for invoices, so we are still running on schedule. However, we must take these pre-emptive actions to prevent more drastic measures later."

The tax on extracted natural resources like coal have been among the better-than-expected performers. But personal income taxes, which account for nearly 40 percent of general revenue, are 7 percent below year-to-date estimates. Consumer sales and use taxes are 4.5 percent behind, and provide a third of all general revenue.

Manchin's statement said certain budget lines, including "programs that fulfill a vital state interest and debt service," are exempt from his executive order.