Senate Health Care Bill Cuts Medicaid to Pay for Tax Cuts for the Rich – UPDATED

The Better Care Reconciliation Act (BCRA), the latest Republican plan to repeal and replace the Affordable Care Act (ACA), was introduced in the U.S. Senate on June 22, 2017, and is awaiting a vote. In its current form, the bill would eliminate most of the provisions of the ACA, including its tax provisions, and drastically cut Medicaid, essentially ending Medicaid expansion and instituting per capita caps. The end result of these changes for West Virginia would be a large tax cut for a small number of the wealthiest individuals in the state, while tens of thousands would lose Medicaid coverage.

The two largest tax provisions that would be repealed are the  Additional Medicare Tax, which is a 3.8 percent tax on wages for taxpayers with wages exceeding $200,000 ($250,000 for married earners), and the Net Investment Tax, which is a 3.8 percent tax on investment income for taxpayers with income exceeding $200,000 ($250,000 for married couples). Repealing these two taxes would cost over $31 billion, with 85 percent of the benefit going to the top 1 percent of Americans.

According to the Institute on Taxation and Economic Policy, only 11,100 West Virginians would benefit from the repeal of these two taxes, or only 1.2 percent of taxpayers in the state. The tax cut would be worth $46 million for West Virginia, with 96 percent of the savings going to the wealthiest 1 percent in the state, or those earning more than $346,000/year.

On the health care coverage side, federal funding for Medicaid would be $102.2 billion lower in 2022 under the BCRA than under the ACA, a 26.4 percent decline. Federal funding for premium tax credits and cost-sharing reductions would also fall by $38.2 billion, an 84 percent decrease. West Virginia would lose $1.8 billion in federal spending, a 48.9 percent decrease compared to current law.

The decrease in funding would force West Virginia to end Medicaid expansion, and make further restrictions to Medicaid eligibility. According to the Urban Institute, 264,000 West Virginians would lose their Medicaid coverage due to the loss of federal funding. Overall, 218,000 West Virginians would lose health insurance coverage, quadrupling the state’s uninsured rate.

 

The cost to give 11,100 of the wealthiest West Virginians millions in tax cuts is 218,000 uninsured West Virginians. The “savings” from the cuts to Medicaid are poured directly into tax cuts which overwhelmingly benefit the wealthy. Overall, for every West Virginian who would benefit from the tax cuts in the Senate health care bill, 24 would lose their Medicaid coverage. The core of the BCRA is taking away health care from millions of people in order to pay for a tax cut for the rich.

 

***UPDATE***

New numbers from the Urban Institute provide estimates for the number of children affected by the Senate’s health care bill. In West Virginia, the number of uninsured children would increase by 19,000 by 2022 under the Senate health care bill, a 475% increase. The uninsured rate for children in West Virginia would increase from 1.1% to 6.2%. West Virginia would have the largest increase in the share of its children who are uninsured in the country.

A Short History of the 2017 Budget Crisis in West Virginia (So Far)

This week, Governor Justice said he would let the state budget become law instead of signing it because the budget contained so many cuts ( a “travesty”) and that his proposed tax plans failed to become law. Governor Justice mostly blamed Democrats and Republicans in the House of Delegates, along with the Senate Democrats, for the state’s “bare bones” budget because they refused to go along with several income tax cut plans that were put together between himself and Senate Republicans. It is important to recognize that had the legislature gone along with most of the governor’s proposed tax plans, the state would have do to make much deeper cuts next year and beyond.

Given the choice between baking in large-scale future budget cuts with big tax cuts and passing a budget with sizable cuts for one year, it seems like the legislature made the better of two bad choices in refusing to go along with Senate Republicans and the governor.

As Governor Justice pointed out during his budget announcement, there were several tax plans that he and the Senate proposed that failed to pass in the House. While the governor called them “missed opportunities” it is more apt to look back upon each of the tax plans as missed fiscal calamities for the state that would have resulted in deeper budget cuts in the future.

While Governor Justice put together several tax plans during the regular legislative session that raised enough revenue to close the budget gap  – which moved from -$497 million to -$270 million based on agreed to budget reductions – his joint proposal with Senate Republicans during the last night of the 60-day regular session would have led to larger budget cuts in FY 2018 and beyond. Therefore, it is difficult to understand how Governor Justice can see this as a “missed opportunity” if he is concerned about budget cuts hurting the state.

Strangely, Governor Justice told the media  that  “all this [the passed state budget and no tax reform] does is kick the can down the road, and there’s massive budget holes in the out years.” The governor went on to say that the budget gap for FY 2019 is “$179 million” and “$486 million” by FY 2022. A simple look at the revenue impact of each of the “missed opportunities” or tax proposals shows that these gaps would have likely been much larger in outer years if most of these tax proposals would have been adopted.

Below is table that includes the net revenue impact of each of the proposed tax plans from the governor, House, Senate and several that the governor endorsed along with Senate leadership. Outside of the governor’s first tax plan that was included as part of this original budget for FY 2018 and his second proposed tax plan based on agreed to budget cuts (these were not mentioned as “missed opportunities” by the Governor), all of the other tax plans proposed by the Governor (along with the Senate) failed to raise enough money to close the projected budget gap for FY 2018 let alone for future budget years.

In fact, the tax plan the governor put together with Senate Republicans on the last night of the session on April 8th – missed opportunity #1 according to the governor – would have drastically reduced revenues for the state and expenditures absent future tax increases. By FY 2021, the State Tax Department estimated that it would have reduced General Revenue Fund collections by -$220 million and much more going forward, as the income tax was phased down. The House did not fare much better. Two out of three of the tax plans that passed the House lowered net revenue collections by FY 2020, which would require tax increases or more future budget cuts. While the tax plan passed by the Senate last Thursday increased net revenue by $93 million in FY 2018 – presumably close to enough revenue to pass the governor’s FY 2018 budget during the special session along with the new revenue estimates – the estimated revenue for FY 2019 was $30 million less, leading most likely to more budget cuts next year.

While Protect WV,  WV Center on Budget Policy,  and some lawmakers (see here and here) put forth a several revenue proposals for avoiding the deep cuts included in the FY 2018 budget, the legislature unfortunately could not agree on any revenue enhancements. Despite this inaction, the state’s fiscal health and funding of future budget priorities would have been much worse had most of the “missed opportunities” become law. On top of the tax proposals not bringing in enough money to fund budget priorities, most of the compromise tax plans between the Governor and Senate  (see here, here, here, and here) lowered taxes on the wealthy while increasing them on most West Virginians.

If there is silver lining to the state’s budget crisis this year it is that the budget passed by the legislature last week contains about $122 million more in General Revenue Fund appropriations than the budget vetoed by the governor in April. While it remains to be seen whether the new revenue estimates for next year pan out, they at least helped avoid more severe budget cuts.

Moving forward, the state is in for more hard times as the state faces yet again another large budget gap next year and likely stalemate on the need to pass sufficient revenues to meet the states needs. That said, it would have been a lot worse had the legislature acted on many of the governor’s tax proposals.

 

 

Comparing the FY 2017 and FY 2018 Budgets

Earlier this week, this post covered all the changes in the final FY 2018 budget with the governor’s original proposal, with the final budget coming in at $280.3 million below the governor’s original proposal. But how does it compare with last year’s budget?

The FY 2018 base budget (General Revenue, Lottery, and Excess Lottery) totaled $4.653 billion, $46 million more than the FY 2017 budget, which totaled $4.607 billion. Most of that increase can be attributed to Medicaid. General Revenue appropriations for Medicaid are increased by $60.9 million from FY 2017. This increase is due to the use of $70 million in Rainy Day Funds in FY 2017 for Medicaid, which lowered FY 2017’s General Revenue appropriations. FY 2018’s budget does not use the Rainy Day Fund, and makes up for it with an increase in General Revenue appropriations. So even though the state is appropriating less overall for Medicaid in FY 2018, General Revenue appropriations have increased.

Aside from General Revenue appropriations for Medicaid, nearly every other area of the budget is cut compared to FY 2017. Executive Branch agencies are cut by $2.7 million, the Department of Commerce is cut by $4.1 million, the State Department of Education is cut by $12.9 million, Education and the Arts is cut by $2.4 million, DHHR other than Medicaid is cut by $7.7 million, and Higher Education is cut by a total of $19 million. The only areas of the budget to see a significant increase over FY 2017 are payments to the Teacher’s Retirement System Unfunded Liability (+$23.3 million) and the WV State Police (+$7.1 million). The table below details all of the changes from FY 2017 to FY 2018.

FY 2018 continues the downward trend for state expenditures. Since 2012, only Medicaid, foster care, and the Judiciary have seen an increase in General Revenue spending (Senior Services was not fully part of General Revenue in FY 2012). Higher Education has seen the biggest divestment, with appropriations declining by $74 million since 2012. Overall, General Revenue spending has only increased by 1.9 percent since 2012.

West Virginia Finally has a Budget

After failing to come to an agreement on a plan to either completely overhaul the state’s tax system, or simply raise some revenue to close the upcoming budget gap, the legislature passed a “bare bones” budget over the weekend, ending the extended special session just two weeks before a possible government shutdown.

The FY 2018 budget totals $4.653 billion, including $4.225 billion from General Revenue. That is $280.3 million less than what was proposed by the governor at the beginning of the regular session, and $124.6 million less than the governor’s special session proposal.

Cuts were made throughout the budget to bring it into balance. Some of the major cuts, compared to the governor’s original proposal, include:

  • Eliminating the Save Our State Fund
  • $5.3 million cut from the Department of Education, including $1 million cut from 21st Century Assessment and Professional Development and eliminating Innovation in Education and Technology Systems Specialist funding  – $4.5 million.
  • Canceling the teacher’s pay raise – $19.4 million.
  • Smoothing teacher’s retirement system unfunded liability payments – $44.7 million.
  • $4.5 million cut from the Division of Health, including eliminating funding for the Tobacco Education Program – $3 million.
  • $5 million cut from the Consolidated Medical Service Fund.
  • $84.2 million reduction from General Revenue funding for Medicaid.
  • $3.8 million cut from the Division of Corrections.
  • $1.5 million cut from the State Police.
  • $2.8 million cut from Community and Technical Colleges.
  • $6.2 million cut from Higher Education, which comes on top of the $10 million cut in the original FY 2018 budget proposal.
  • Funding for the Educational Broadcasting Authority, which was eliminated in the governor’s original proposal, was restored, but cut by $1 million from FY 2017.

The table below lists all of the cuts made to the budget compared to the governor’s original proposal.

Additional Revenues Still Needed to Avoid Cuts to Critical Needs

As MetroNews reported, the state Senate passed a state budget of $4.225 billion in General Revenue Fund spending for FY 2018. The budget contains deep cuts in Medicaid and higher education above and beyond what the governor proposed during the regular and special legislative session. The budget also relies on updated revenue estimates of $169.9 million for FY 2018 that are “contingent on” the “projected economic activity” associated with passage of a road bond passing along with increased State Road Fund revenue from a gas tax and DMV fee hikes.

According to Governor Justice, the new FY 2018 General Revenue Fund estimates are $4.225 billion compared to $4.055 from the original estimates released in February 2017. The biggest revenue change – comprising 61 percent of the total increase in revenues – is the state severance tax, which increases by $104 million, from $257 million to $361 million. Personal income tax collections are expected to be $26 million higher, which increases from $1.834 billion to $1.860 billion. The new revenue estimates also rely on an increase in Special Revenues (one-time fund from Workers’ Comp) of $33 million and small increases in the liquor profits and departmental collections totaling $7.2 million.

It is unclear how the projected increase in severance tax collections is tied to the passage of a road bond, while the $26 million in increased personal income tax collections could theoretically be attributed to the economic activity from a large revenue bond being issued. That said, it is not a sound practice to adjust revenue estimates based on a public vote for a road bond that has yet to take place.

Even taking into account the $169.9 boost in revenue for FY 2018, the governor’s proposed budget needs an additional $124 million to match the $4.335 billion in anticipated General Revenue Fund expenditures. While the Senate has said that the reason they are making large budget cuts is because they could not agree on a bill to implement “tax reform”  (personal income tax cuts), the latest compromise draft tax plan only boosted revenues by $89 million in FY 2018. After FY 2018, the revenues in the draft plan fell to just $12 million in FY 2019 and close to zero in each subsequent year.

An examination of each of the five tax plans that have passed the Senate shows that only three of them provided enough revenue to pass the governor’s proposed budget for FY 2018 while all of them would have led to deeper budget cuts in FY 2019 and beyond. The reason for the sharp revenue losses in FY 2019 and beyond had to do with the partial phaseout of the income tax that the Senate included in each plan.

While the good news is the personal income tax reductions seem to be off the negotiating table, the bad news is the Senate now does not want to pursue any revenue measures that will avoid even larger budget cuts that will deprive our communities and families of what they need. With the clock winding down on the Special Session, let’s hope the legislature finds additional revenue (Simple Plan!) that will protect our state and ensure we are not cutting the budget even more next year.

 

More Budget Cuts on the Table (Updated 6/15/17)

As the extended special session drags on, with no agreement on a tax bill yet, the House has made adjustments to the governor’s budget plan submitted at the beginning of the special session.

To recap, after vetoing the budget passed during the regular session, which was balanced by taking $90 million from the Rainy Day Fund and major cuts to Medicaid and higher education, the legislature went into a special session and the House, the Senate, and the governor have all been in a stand off over personal income tax cuts and sales tax increases ever since.

With no deal on revenue, the governor introduced a new budget with HB 115. HB 115 made a number of cuts compared to the governor’s original proposal, including reducing the Save our State Fund to $15 million and cutting higher education by $5.4 million. At the time, HB 115 would have required the legislature to raise about $260 million in revenue to balance the budget.

Yesterday, the House introduced a committee substitute for HB 115, with $78 million in further cuts. While the full text of the bill is still not available, a summary was posted online.

Here are the major changes in the committee substitute for HB 115 compared to the governor’s version.

  • The Save Our State Fund is eliminated fully. The governor’s originally called for a $105.5 million SOS Fund, and then reduced it to $15 million at the start of the special session. The House bill eliminates it entirely.
  • $28.3 million in further cuts to the Department of Education, including $8 million in program cuts and $20 million cut from canceling the teacher’s pay raise. HB 115 already included $44.7 million in savings from the unfunded liability smoothing.
  • $1.7 million in further cuts to the Department of Education and the Arts, including $941,294 cut from Education Broadcasting Authority.
  • $33 million cut from DHHR. According to the summary posted online, this includes $13 million cut from Medicaid.
  • No further cuts to Higher Education, leaving Higher Ed at $13.8 million below FY 2017’s funding.

The Senate also introduced their plan for the budget through an amendment to SB 1013. The Senate’s bill also makes cuts to the Governor’s special session proposal, but goes much further than the House, cutting by $254 million.

Here are the major changes in the amendment to SB 1013 compared to the Governor’s introduced version of HB 115.

  • The Save Our State Fund is fully eliminated, plus an additional $250,000 cut to the Division of Energy.
  • The teacher pay raise is canceled, cutting $20 million from the Department of Education.
  • $85,813 cut from the Education Broadcasting Authority.
  • $118 million from Medicaid.
  • $5.6 million cut from the Bureau of Senior Services.
  • $19.3 million cut from Community and technical colleges, which would be a 30 percent reduction from FY 2017.
  • $75.2 million cut from Higher Education, which would be a 22 percent reduction from FY 2017.

The figure below shows the levels on General Revenue expenditures from the various budget proposals in both the regular and special session.  The latest version from the House is $223 million below the governor’s original proposal, and is very close to the House’s proposal during the regular session. Even the governor’s special session proposal is $155 million below the original proposal. The Senate’s proposal is $409.9 million below the governor’s original proposal, and is even below the budget that was vetoed by the governor at the end of the regular session.

***UPDATE***

Last night, the Senate passed an amended version of SB 1013, with smaller cuts than the version mentioned above, due to improved revenue forecasts. The Senate budget, balanced with millions in cuts, was passed in response to the failure to come to an agreement on a tax reform package that include major cuts to the income tax. Compared to the Governor’s special session budget bill, the version passed by the Senate includes:

  • Elimination of the Save our State fund.
  • Canceled teacher’s pay raise.
  • $85,813 cut from the Education Broadcasting Authority.
  • $54.3 million cut from General Revenue funding for Medicaid. The net effect of this cut is only $34 million, as the Governor adjusted down the amount needed for Medicaid by $20 million in a letter to the legislature.
  • $5.6 million cut from Senior Services
  • $6.4 million cut from Community and Technical Colleges, which would be a 10% cut from 2017.
  • $23.3 million cut from Higher Education, which would be a 7% cut from 2017.

The budget passed by the Senate is $124 million below the governor’s special session proposal, and $280 million below the governor’s original budget.

 

***UPDATE***

After the Senate passed SB 1013, the House last night amended and passed their own version of the bill. Like the Senate’s bill, the House’s version of SB 1013 totaled $4.225 billion, but makes cuts in different areas than the Senate’s version, and also relies on some reserve funds and anticipated lottery surpluses. The House’s version of SB 1013 includes:

  • Elimination of the Save our State Fund.
  • Canceled teacher pay raise.
  • $8.3 million cut from the Department of Education.
  • $1.7 million cut from the Department of Education and the Arts, including $941,294 cut from the Education Broadcasting Authority.
  • $5 million cut from the Consolidated Medical Service Fund.
  • $74 million cut from General Revenue funding for Medicaid. The net effect of this cut is only $25 million, after the Governor’s adjustments and the planned use of reserves and surpluses.
  • $197,723 cut from Veterans’ Assistance.
  • No further cuts to Higher Education, which would leave Higher Ed at $15 million below FY 2017 levels.

 

Guest Blog: Kansas’ Experiment Yields Valuable Lessons

Heidi Holliday, Executive Director of the Kansas Center for Economic Growth  

You’re welcome, America. Our state, Kansas, just wrapped up a 5-year long experiment in governance from which the other 49 states can now glean some important lessons. The Kansas Legislature has voted to roll back much of the 2012 package of tax cuts that sent the state into a downward spiral of financial instability and weakened the Kansas’ public schools, universities, Medicaid program, and virtually everything else that the state funds.

With the state facing yet another budget shortfall of $900 million, government leaders decided that enough was enough. Governor Brownback, who heralded the 2012 experiment, was proposing yet more temporary band-aid approaches and more cuts deal with the shortfalls. The Legislature chose a different path and instead sent the Governor a bill that would raise more than $1.2 billion in new revenue over two years by, among other things, repealing a costly tax break for pass-through income, rebalancing individual income tax rates by reinstating a third tax bracket, and reversing course on the Governor’s plan to eliminate our state income tax. Brownback vetoed the legislation but, with bipartisan support, the House and Senate quickly overrode the veto.

Our state has begun the path to fiscal stability and is closer to becoming a model of good policy choices as much as it is a cautionary tale. The damage done to Kansas from this reckless experiment will not be undone overnight, but other states need not wait to act upon the lessons learned.

Put simply, revenue matters. You can’t get something for nothing. We all want and deserve thriving communities with great schools, parks, and modern roads and bridges; and we chip in to pay for that. That’s what taxes are for.

Because of the scope of the 2012 changes, it didn’t take long before Kansans in every corner of the state began connecting the dots between the actions of state lawmakers and the quickly eroding quality of the things that make for a good economic foundation in every community. With every subsequent shortfall, the picture became more clear. Meanwhile, the promised economic boom—and the revenue rebound that would supposedly follow—never happened (as economists predicted). In the last few election cycles, voters have viewed candidates and their promises through a different lens, and the 2017 Legislature had the experience and public backing to chart a new course.

Most state tax codes, including ours, need further reform, but it’s high time that state tax policy adhere to one basic, proven (and now proven once again) principle – states need revenue to invest in the things that create thriving communities and a prosperous economy. Kansas just learned this lesson again, the hard way, so that your state doesn’t have to. You’re welcome.

New Tax Plan Still Raises Sales Tax to Pay for Income Tax Cuts

The conference committee in the West Virginia legislature met today to discuss the latest iteration of the tax plan that aims to balance the state’s budget for next year and beyond.  The new tax plan draft includes many items in previous versions of tax bills, but the “triggers” for the phase-out of the personal income tax have not been drafted.

Below is the latest draft of the tax plan. Altogether, the plan is estimated to increase net General Revenue Fund collections by +$89 million in FY 2018 and only +$12 million in FY 2019. This means the legislature will have to find an additional $77 million to balance the budget in FY 2019 if this bill is passed. This would be on top of the projected deficit for next year.  It is also unclear how the net increase of $89 million will balance the current proposed budget given that it needs about $270 million above current revenue estimates.

The Governor has released new revenue estimates (unofficial) for FY 2018 that rely on at least $100 million from “economic growth” from passage of a $2.8 billion road fund package and income and severance tax cuts. It is not a common practice to balance a state budget using quasi “dynamic scoring” or projected economic growth based on floating a road bond. This is not a sound practice in budgeting.

Based on reporting, the additional $89 million from the tax plan would still be over $115 million shy of balancing the Governor’s proposed budget for FY 2018 absent the “economic stimulus.” Over the next several fiscal years – if no triggers are met – the net revenue from the compromise tax plan would decline each year. By FY 2022 the tax plan would result in a negative revenue for the general revenue fund, according to estimates.

Pushing aside the issue of the personal income tax triggers that could grow the budget deficit even more in outer years, it is clear that this new proposal is unsound and continues to raise taxes on most West Virginians to pay for income tax cuts that the wealthy will benefit the most from.

According to the Institute on Taxation and Economic Policy, the plan increases taxes on 80 percent of West Virginian households  while lowering taxes on the top 20 percent of households. This is because lower income West Virginians pay more in sales taxes than incomes taxes, while the opposite is true for higher income people. Overall, the top 1 percent would receive an estimated tax cut of $1,219 on average while those making $26,000 would see a tax increase of $73 on average.

 

 

The legislature will need to make major changes to this proposal if it wants to provide the state with a sound fiscal footing. The best approach at this point would be to raise the sales tax rate and broaden the sales tax base and take out the central problem thing that is holding back our ability to pass a state budget: the personal income tax cuts.

President Trump’s Draconian Budget Hits West Virginia Hardest

For President Trump’s proposed Federal “Blueprint” Budget for 2018, the bottom line is clear: West Virginia stands to lose more than any other state. The proposed budget, which was sent to Congress virtually unchanged from its original form in March, cuts discretionary funding for major federal agencies by $54 billion and it is estimated to cut mandatory funding by $5 billion for 2018, and an estimated $800 billion over the next 10 years. Discretionary funds are appropriated by the federal government to states for vital services and programs, while mandatory funds go toward safety net programs that bypass the state legislature.

West Virginia relies more on federal assistance than other states because of our high poverty rates, low-wage jobs, and our generally unhealthy and aging population. In FY 2017, West Virginia received over $965 million dollars for discretionary spending from the federal government, which will be reduced by nine percent, or about $86.5 million overall, in the president’s FY 2018 proposal. The cuts at the federal level will shift the responsibilities onto states to provide the necessary funds to maintain discretionary programs such as 21st Community Learning Centers and the Appalachian Regional Commission. It is highly unlikely West Virginia would chose to fund any of these programs.

Cuts to mandatory funding will have a deep impact as well. In FY 2017, the state received over $4 billion in mandatory funding, for programs like Medicaid, Supplemental Security Income, Social Security and Disability Income, and Supplemental Nutritional Assistance Program. If the president’s proposal is enacted, West Virginia will lose about five percent or $187 million, of those funds next year. West Virginia is in no position to inherit this combined $273 million expense next year in light of the current budgetary shortfalls. Over the next 10 years, that number will grow as reductions in vital safety net programs such as SNAP begin in 2020.

Proposed Budget Cuts to Discretionary Funds

The fiscal impact of the elimination of federal grant programs by the president’s budget will vary from state to state. Some states simply require less federal assistance than others due to the relative disparities in economic strength. A $94 million reduction in discretionary funds is disconcerting because it will lead to increased economic insecurity and decrease access to programs that provide basic housing, nutritional, and health needs. These funding cuts will come from eliminating educational programs, vouchers for nutritional and housing needs, job training programs, and other federal initiatives aimed at economic development in Appalachia’s rural communities. The only department that is not seeing any cut is the Department of Transportation, which is getting a $9 million increase. However, this slight increase counts for only 1 percent of the total discretionary funds.

The Department of Education has served an estimated 200,000 West Virginian students since 2004 through the 21st Century Community Learning Centers program, which provides academic enrichment opportunities during non-school hours for children, particularly those who live in high poverty and low performing school districts. President Trump’s budget completely eliminates this program. As of 2014 there are 133 sites across the state providing mostly elementary students with resources to meet state and federal education standards.

The Appalachian Regional Commission (ARC), which the President singled out and entirely eliminated under his proposed budget, was one of the most ambitious programs currently investing in West Virginia and the Appalachian region. The ARC brought nearly $24.1 million to 55 projects throughout West Virginia in the last two years and was set to attract nearly $28 million more in private investment to create economic opportunities, a ready workforce, and critical infrastructure.

Proposed Budget Funding Cuts to Mandatory Funding

Cuts to mandatory funding could be somewhere around $800 Billion over the next 10 years, according to experts. Programs that serve as a basic safety net have long since been considered instrumental to the country’s national wellbeing. For example, without Social Security an additional 122,000 seniors in West Virginia would live in poverty. In West Virginia, and in many other states, safety net programs are also a large share of the state’s economy.

An illustrative way to measure how much of an impact these programs have on West Virginia’s economy is to look at each program’s contribution as a percentage to the state’s personal income – a proxy for a state’s economy.  Medicare for instance, brings in about 6.4 percent of the state’s personal income, the most of any state.

The Supplemental Nutritional Assistance Program (SNAP), also known as food stamps, which helps struggling families and workers put healthy food on the table, reached nearly 357,000 West Virginians, or 20 percent of the state’s population and put approximately $499 million into West Virginia’s economy. The president’s proposal cuts $193 billion (25 percent) of SNAP’s funding nationally over the next 10 years. For West Virginia, that would mean an annual state contribution of $125 million, and $869 million over the next 10 years to replace the loss in federal funds.

West Virginia will likely see deep cuts in Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI), as well. SSI and SSDI benefits go directly toward low-income households who had professional careers cut short due to a disability and families caring for children with disabilities such as down syndrome, autism, and blindness. The president’s proposal cuts $72 billion over 10 years to disability programs, including SSI and SSDI. A reduction to these funds will mean those already struggling to make ends meet will struggle even more for the assistance they need to support themselves and their families and stay out of bankruptcy. Once again, West Virginia relies more on these programs than any other state.

The president’s proposed budget is an effort to reduce overall federal spending on programs and strengthen the military, it achieves this through targeting the nation’s poorest and most vulnerable populations by drastically reducing funding for the programs they rely on. The figure below is an illustration of major federal programs (SNAP, SSI, SSDI, Medicaid, and Medicare) together as a share each state’s personal income. West Virginia stands to lose the most from the funding cuts proposed by the president not only in real dollars flowing into the state, but perhaps even more importantly, in the quality of the services these programs provide (Figure 1).