Analysis of Governor’s FY 2014 Budget Proposal: Declining Revenue Hurting State
On February 13, 2014, Governor Tomblin released his FY 2014 budget, setting the state’s priorities for the coming year. While West Virginia avoided the major budget problems that plagued many other states during the recession and its aftermath, recent events have finally caught up to the state’s budget, and many programs and agencies will see large cuts in FY 2014. After avoiding budget cuts for several years, Governor Tomblin called on state agencies to cut spending by more than $75 million in the FY 2014 base budget. Read PDF of report.
Governor Tomblin’s state budget proposal totals $11.28 billion, a $202.2 million decrease from last year’s enrolled budget. Appropriations from state resources total $7.2 billion, down $150.2 million from last year, while appropriations from federal resources total $4.1 billion, a $51.8 million decrease.
This brief provides an overview of base budget changes, as well as important budget trends and future budget challenges. It also highlights opportunities for creating a stronger and healthier budget that can provide the investments that will create prosperity.
- The FY 2014 proposed base budget (general revenue and lottery) is approximately $34.9 million or 0.8 percent less than the enrolled FY 2013 budget.
- Nearly half of the $75 million in proposed budget cuts are derived from higher education, which could result in steeper increases in college tuition.
- West Virginia ranks high in education spending because it is a low-income state with large unfunded liabilities, expensive transportation needs, and aging schools.
- While base budget Medicaid spending increased by $142 million in FY 2014, total state-source appropriations to Medicaid is $57 million less than in FY 2013.
- The FY 2014 Six-Year Financial Plan shows smaller future budget gaps mostly because of spending reductions put into place in FY 2014.
- The only source of substantial revenue growth projected over the next five years is from personal income tax collections. Revenue from severance, B&O, tobacco, corporate net income/business franchise, and the lottery are projected to decline.
- West Virginia has the third-largest rainy day fund in the country at $916 million.