First Week on Budget Special Session Wraps Up

Today the West Virginia legislature wraps up its first week of work on passing a state budget. The most notable accomplishment was the Senate passage of SB 1005 which would raise the tobacco tax by 45-cents/pack. The bill was read for the first time in the House today.

During the Senate debate on the measure, Senator Ron Miller (D-Greenbrier) tried to amend the bill to increase the tax by an additional 55-cents with the extra revenue to be earmarked to fund a state Earned Income Tax Credit. Watch clip of Senator Miller’s floor speech here.

Next week the legislature will continue its work on proposals that were part of Governor Tomblin’s special session call. While the state desperately needs additional revenue, the governor’s tax increases disproportionately ask more from low-income people than the wealthy. Read Sean’s blog post for more information.

The governor’s ideas to fill the budget gap total less than the major tax cuts of the past. Beginning in 2007, West Virginia enacted a number of major tax cuts, including phasing out the grocery tax on food and the business franchise tax, reducing the corporate net income tax rate from 9 to 6.5 percent, and making some cuts to the personal income tax. All these cuts, along with a drop in energy prices, have helped blow a huge hole in the state’s budget. Here’s more in Ted’s blog post.

West Virginia Cuts to Higher Education Among Worst in the Country

At a time when most states are restoring funding to higher education that was cut during the Great Recession, a new report shows that West Virginia is going in the opposite direction, with troubling consequences. The result is skyrocketing tuition increases, over 42% since 2008, making college harder and harder to afford, especially for low-income families.

Here’s more in today’s Charleston Gazette-Mail

Welcome Tara and Jesús!

This week we welcomed our two summer interns, Tara Holmes and Jesús Ballesteros.

Tara is a PhD student in Cultural Analysis and Theory at Stony Brook University in New York. Her research interests include analyzing and critiquing the effects of neoliberalism on marginalized populations, particularly working-class women and women of color. She is a native of Sissonville, West Virginia. Tara’s work as a Summer Policy Associate will have her focusing on paid sick days and family leave policies as well as gathering data for the 2016 State of Working West Virginia report.

Jesús is currently double majoring Computer Science and Computer Engineering at WVU Tech in Montgomery, WV. Last year he worked on a research project of parallel computing and is currently a teacher assistant tutoring students on programming classes. He is a native of Spain. His work this summer as a Summer Research Associate will include designing a website containing historical information on West Virginia budgets and funding priorities.

West Virginia’s Workers to Benefit Most from New Overtime Rule

This week, the Labor Department issued its final rule updating overtime regulations, which will automatically extend overtime protections to millions of workers in its first year of implementation.

The rule extends overtime protections to workers earning less than $913 per week or $47,476 annually for a full-time worker, and established a mechanism to update the threshold every three years.

Here’s more in Sean’s blog post.


Got an iPhone? Thank Government-Funded Ingenuity


Try This Conference – Just Two Weeks Away!

It’s not too late to register for the annual Try This conference in Buckhannon taking place June 3-4.

Here’s what’s in store:

  • Trade ideas with people from all over the state who are doing great things.
  • Get inspired, learn, plan your next steps.
  • Apply for a minigrant for your healthier-community project!
  • Help build a statewide movement!
  • Have lots of fun.

Go here to register and/or learn more.

Thousands of West Virginians Now Eligible for Overtime

Yesterday, the Labor Department issued its final rule updating overtime regulations, which will automatically extend overtime protections to millions of workers in its first year of implementation. The rule extends overtime protections to workers earning less than $913 per week or $47,476 annually for a full-time worker, and established a mechanism to update the threshold every three years.

Under the Fair Labor Standards Act, workers eligible for overtime must be paid “time-and-a-half” or 1.5 times their regular pay rate for each hour of work per week over 40 hours. Currently, hourly workers in most service and blue-collar jobs are guaranteed the right to overtime pay.

For salaried workers, the right to overtime is determined by their pay and nature of work. Currently, salaried workers who earn below $455/week ($23,660/year) are eligible for overtime, but workers who earn more than $455/week can be exempted from overtime if their occupations are considered professional, administrative, or executive.

The current salary threshold has not kept pace with inflation or the changing economy. In 1975, the overtime salary threshold covered about 62 percent of all salaried workers, compared to just 8% today. Had the threshold kept pace with inflation since 1975, it would be about $52,000 today. The proposed threshold largely restores its lost value.

The new rule means that millions of workers will get raises to put them over the threshold, be paid overtime for their overtime work, or have the weekly hours scaled back to normal full-time levels.

Overall, there are about 12.5 million salaried workers making at least $455/week (the old threshold) and $913/week (the new threshold), who will benefit from the rule change, including 66,000 in West Virginia. Of the 50 states, West Virginia has the biggest share of salaried workers (30.7%) who will directly benefit from raising the threshold.

 

Governor’s Proposed Tax Increases Smaller than Past Tax Cuts

Last week, Governor Tomblin issued a proclamation to call the legislature into a special session to address the state’s impeding budget crisis on Monday. This announcement came on the heels of a recent downgrade in the state’s bond rating from Standard & Poor’s Rating Service.

Due to a lack of consensus between the legislature (mostly the House leadership) and the governor on how best to close an estimated $270 million budget gap (this does not include cuts and reductions already baked into the Governor’s budget proposal, which takes this number above half a billion dollars), the governor included not only three bills to raise taxes but also a bill to give him authority to furlough state employees in case of a fiscal emergency. Along with Governor Tomblin’s budget bill, he also included in the call a supplemental appropriation bill to transfer $38 million in various funds and tap the Rainy Day Fund for $29 million to close part of the budget gap for the current fiscal year.

The tax increases proposed by the governor include: 1) raising the tax on tobacco products – including a 45 cent increase in the state’s cigarette tax, increasing the wholesale tax on other tobacco products from 7 to 12 percent, and establishing a new tax of 7.5 cent per milliliter on electronic cigarettes; 2) applying a sales tax on telecommunications services and ancillary services; and 3) raising the sales and use tax rate by no more than one percentage point. The tobacco taxes increase is expected to raise $78 million, the sales tax on telecommunications services would raise $60 million, and the sales tax rate increase to 7% from 6% would raise $196 million for a total of $334 million.

As Sean pointed out yesterday, these three tax proposals all hit low- and moderate-income families much harder than those at the top, and make our state and local tax system even more regressive and upside down. The good news, as Sean points out, is that there are much better options to close the revenue gap that include asking the wealthy to pay their fair share. The bad news is that these options were not included in the governor’s proclamation and will most likely not be considered. Making things even worse, it seems likely that the only revenue proposal that might pass is raising the tobacco tax by 45 cents per pack (instead of $1 increase that would not only raise more revenue but do more to prevent youth smoking, early deaths, and control health care costs). 

While many legislators have signed “no tax” increase pledges and, alternatively, there are many others who believe that passing additional tax increases would significantly increase the state’s tax base, it is important to recognize that Governor Tomblin’s proposed tax increases would total less than the major tax cuts of the past. Beginning in 2007, West Virginia enacted a number of major tax cuts, including phasing out the grocery tax on food and the business franchise tax, reducing the corporate net income tax rate from 9 to 6.5 percent, and making some cuts to the personal income tax (increasing the homestead exemption and establishing a low income family tax credit).

Tax Changes Present and Past

According to the West Virginia Department of Commerce, the business tax reductions totaled more than $230 million in 2015. Overall, the major tax cuts of the past ten years add up to at least $424 million while the governor’s proposed tax increases total only $334 million. While the tax cuts of the past were somewhat balanced between difference income groups, the governor’s proposals all hit low- and middle-income families much harder.

The irony of the state’s current budget crisis is that the tax cuts of the past are roughly the size of the state’s current budget gap. These is why we warned years ago that eventually these tax cuts would come home to roost.

As the legislature continues to meet over the next week or so to iron out the FY 2017 budget, it is imperative that they take a fiscally responsible approach that includes additional revenue to meet the needs of our state’s citizens. The state cannot continue its dubious path of cutting its way to prosperity. Legislators need to explore options that ensure the wealthy pay their fair share and that provide the necessary resources for essential services and programs. Through these public investments we can create a shared prosperity that makes West Virginia a better place to live, work and raise a family.

New Revenues to Balance the Budget Don’t Have to be Regressive

Last week, Governor Tomblin finally issued the call for the legislature to come back into a special session to balance the FY 2017 budget. The special session will begin today, May 16th, and the governor will once again submit a budget proposal for the legislature to consider.

During the regular session, Governor Tomblin proposed $130 million in new revenue, including applying the sales tax to telecommunication devices and increasing the tobacco tax from $0.55 per pack to $1.00 per pack (along with increasing wholesale price on other tobacco products and taxing electronic cigarettes). These revenue measures, however, did not pass the legislature, and worsening fiscal forecasts now leave a $270 million budget gap to be filled, either with further cuts or new revenue.

Governor Tomblin’s spokesperson has indicated that the governor will once again propose a tobacco tax increase, and that the telecommunications tax will once again be on the table, as well as a 1% increase in the state’s sales tax.

As we’ve noted before, while producing enough revenue to balance the budget, these tax proposals would make the state’s tax system more regressive, with the proposed tax increases falling more heavily on low- and moderate-income families. States should strive to have more progressive tax systems which exemplify the “ability to pay” principle and are also better for the economy. Increasing progressivity in the tax system stimulates the economy, since low- and middle-income individuals and families are more likely to spend most of their money. When the tax burden on low-income people is higher, they spend less, which lowers demand and hurts the economy. In contrast, higher-income individuals spend only a small fraction of their income, meaning a higher tax burden on them is less likely to decrease economic activity. 

The biggest proposal, raising the sales tax from 6% to 7% would fall heaviest on low-income families. Those in the lowest 20% of individual and family income would see their taxes as a share of income increase by 0.6% and those in the middle income range would see an increase of 0.5%, compared to just 0.1% for the top 1%. The sales tax increase would increase revenue by an estimated $196 million.

Raising the tobacco tax would also make the state’s tax system more regressive. On average, those in the lowest 20% of individual and family income would see their taxes as a share of income increase by 0.6% and those in the middle income range would see an increase of 0.3%, compared to just a 0.01% increase for the top 1%. The tobacco tax increase would increase revenue by an estimated $71.5 million.

The same is true for applying a 6% sales tax to telecommunication devices. On average, those in the lowest 20% of individual and family income would see their taxes as a share of income increase by 0.2% and those in the middle income range would see an increase of 0.1%, compared to just a 0.03% increase for the top 1%. The tobacco tax increase would increase revenue by an estimated $60 million.

Altogether these tax increases would raise an estimated $327.5 million, but would do so in a very regressive fashion. Overall, taxes on the poorest 20% of West Virginians would increase by 1.4%, on middle income West Virginians by 0.8%, and on the wealthiest in the state by only 0.2%.

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These regressive tax increases could be partially offset by pairing them with a State Earned Income Tax Credit (EITC). If all three tax proposals are passed, revenue would increase by an estimated $327.5 million, $57.5 million more than what is needed to close the $270 million budget gap. This leaves room for a sizable Earned Income Tax Credit, that would make the tax increase more fair. A state EITC set at 20% of the federal credit would decreases taxes as a share of income by 1.1% for those earning less than $19,000 in West Virginia and by 0.7% for those earning between $19,000 and $33,000.

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While making the tax proposal less regressive, a 20% state EITC would cost an estimated $65.9 million, which combined with the other tax proposals, would leave the state about $8.4 million short of closing the $270 million budget gap. A more progressive tax increase could easily close that gap. For example, West Virginians are provided a $2,000 personal exemption from their state income tax for each household member. Unlike the federal government, which phases out personal exemptions as income rises, West Virginia does not. If the $2,000 per person exemption were phased out for joint filers between $150,000 and $200,000 and eliminated for those over $200,000, it would increase revenue by an estimated $9.9 million and help make the state’s income tax based more on the ability to pay.

Phasing out the personal exemption would result in only a minor tax increase for the wealthiest West Virginians. Taxes as a share of income would only increase by 0.05% for those making more than $333,000 and by only 0.08% for those making between $168,000 and $333,000.

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Adding a 20% state EITC and phasing out the personal exemptions to the other proposed tax increases brings the total estimated revenue increase to $271.5 million, enough to close the FY 2017 budget gap without further budget gaps, and it does it in a less regressive way than tax increases alone. With the ETIC and exemption phase out added in, those earning less than $19,000 would see their effective tax rate go up by 0.3%, compared to 1.4% with the tax increases alone. Those in the top 1% would see a tax increase of 0.21%, compared to 0.15% with the tax increases alone. For those in the middle of West Virginia’s income distribution, their taxes go up by about the same amount under both scenarios. 

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It is important that West Virginia takes a balanced approach to closing its budget gap that includes additional revenue, rather than a cuts-only approach that threatens our state’s struggling economy.  While the tax proposals on the table are regressive, adding a 20% EITC and phasing out the personal exemption go a long way to ensuring that we are not balancing the budget on the backs of the poor while asking little of anyone else. Other, more progressive options should also be considered  to improve the state’s fiscal health and to ensure that more cuts to public investments do not further damage the state’s economy. 

If one wanted to see a revenue package that balanced the budget in a largely progressive way, there are some options. Here’s what such a package could look like:

  • 1% sales tax increase: $196 million
  • $1 per pack tobacco tax increase: $115.3 million
  • Phase out personal exemptions at $150,000, eliminate at $200,000: $9.9 million
  • Change corporate net income tax from current flat rate of 6.5% to a tiered system: $0-$10k at 3%; $10-$25k at 3.75%; $25-$40k at 4.25%; $40-$60k at 5.75%; $60-$150k at 6.25%; and $150k+ at 8%: $40.1 million
  • Create a new top bracket of 8.3% starting at $120k; cut 3% rate to 2%; cut 4% rate to 3.5%; cut 4.5% rate to 4.3%; cut 6% rate to 5.9%; cut 6.5% rate to 6.3%: -$16.4 million 
  • Enact State EITC set at 20% of the federal EITC: -$65.9 million
  • Total Revenue Increase: $279 million

 Here’s what that tax increase would be across income levels:

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Special Session on State Budget Starts Monday

Legislature to Convene for Special Session

On Monday, the West Virginia legislature will convene for a special session to work on passing a state budget. From the outside, there appears to be little consensus with the governor calling for more revenue to help fill the budget gap and the House of Delegates pledging against any new taxes. During the regular session, the Senate called for a $1/pack increase in the state’s tobacco tax, even higher than the amount proposed by the governor.

In the meantime, there is much uncertainty within state agencies. Here’s more in the Charleston Gazette-Mail on how the impasse is affecting the state’s Promise scholarship program.

We will keep you posted on how the special session proceeds.


Voting Extended!

It’s not too late to vote for the Our Children Our Future issue ballot.

Choose from a selection of topics under three pillars.

Here are four WVCBP priorities we hope you will support:

#1: Fair Workplace – Legislation that repeals Right to Work, restores Prevailing Wage, enforces paid leave, and ensures equal pay for equal work.

#21: Tobacco Free WV – Banning tobacco use in public parks and creating a new cigarette tax which would pay for expanded tobacco cessation programs in WV.

#23: Encouraging Work in West Virginia – Encouraging Work and EITC: Create a state-level Earned Income Tax Credit would lift families out of poverty and incentivize work.

#25: Gas Up WV – Expanding the natural gas severance tax in WV

VOTE HERE

OCOFCoal Jobs Not Coming Back

Ahead of this week’s primary election, West Virginia was in the national spotlight as voters headed to the polls. National Public Radio aired this story with comments from WVCBP Executive Director Ted Boettner on the future of the state’s coal industry and how trends are unlikely to be reversed no matter how the elections turn out in November. 

Google Bans Payday Lending Ads

Effective July 13, Google will ban ads for payday loans and other related products. This includes “loans where repayment is due within 60 days of the date of issue and with an interest rate of 36% or higher.”

This great news comes out just in advance of an anticipated rule by the Consumer Financial Protection Bureau (CFPB) on the payday lending industry. The WVCBP is working with a national coalition to urge the CFPB to release a strong rule to protect consumers from this predatory form of lending. Such loans are illegal in West Virginia and other states, protecting almost 90 million consumers across the country.


Summer Policy Institute – Will You Sponsor?

The first-ever Summer Policy Institute is just around the corner. The first of its kind in West Virginia, this year’s inaugural event will be a weekend immersion in policy issues for West Virginia’s young people.

The program will involve presentations, panels, and workshops on a broad range of critical issues facing West Virginia, including budget and taxes, health care, poverty, economic development, education, criminal justice, race and gender, and others. In addition to WVCBP staff, participants will hear from and interact with several dozen of the state’s top leaders from academia, politics, government, non-profits and business.

Will you be a sponsor? Donations to the Summer Policy Institute are tax deductible. Help us help a West Virginia student!

Have You Voted?

Vote for the Issues You Care About

The polls are open both for early voting in West Virginia’s primary and for the Our Children Our Future issue ballot. Have you voted?

Choose from a selection of topics in three pillars. Your vote is important! It will be shared with legislators so they know your legislative priorities!

Here are two WVCBP priorities we hope you will support:

#1: Fair Workplace – Legislation that repeals Right to Work, restores Prevailing Wage, enforces paid leave, and ensures equal pay for equal work.

#21: Tobacco Free WV – Banning tobacco use in public parks and creating a new cigarette tax which would pay for expanded tobacco cessation programs in WV.

#23: Encouraging Work in West Virginia – Encouraging Work and EITC: Create a state-level Earned Income Tax Credit would lift families out of poverty and incentivize work.

#25: Gas Up WV – Expanding the natural gas severance tax in WV

VOTE HERE – Voting closes on May 9

Your vote doesn’t matter, you say? Here’s some interesting info on why that just isn’t so and how state advocacy rocks.

OCOF

Budget Crisis Enters Another Month

A problem searching for a solution is the West Virginia budget gap. April numbers are in with even more bad news with income tax and severance tax revenues all lower than projected. Here’s more in the Beckley Register-Herald.

Both the WVCBP and our Senior Policy Analyst Sean O’Leary were quoted in the Charleston Gazette-Mail this past weekend which called for leadership in solving the state’s budget woes. 

Summer Policy Institute – Will You Sponsor?

The first-ever Summer Policy Institute is just around the corner. Students will receive their acceptance letters next week and plans are being finalized. The first of its kind in West Virginia, this year’s inaugural event will be a weekend immersion in policy issues for West Virginia’s young people.

The program will involve presentations, panels, and workshops on a broad range of critical issues facing West Virginia, including budget and taxes, health care, poverty, economic development, education, criminal justice, race and gender, and others. In addition to WVCBP staff, participants will hear from and interact with several dozen of the state’s top leaders from academia, politics, government, non-profits and business.

Will you be a sponsor? Donations to the Summer Policy Institute are tax deductible. Help us help a West Virginia student!

Why Do We Want West Virginia to be Known as the Place for Cheap Tobacco?

Calling for a $1/Pack Increase in the Cigarette Tax

Yesterday, a diverse group of advocates met to call for a long-overdue increase in the cigarette tax. West Virginia has the highest adult smoking rate in the nation and one of the lowest cigarette taxes. Raising the tax by $1/pack would still put the state’s rate below the national average while providing about $135 million in much-needed revenue to help balance West Virginia’s budget.

Read more in the Huntington Herald-Dispatch, the Charleston Gazette-Mail, the State Journal and from WV Metro News

Budget Watch

With May right around the corner, West Virginia is entering another month without a budget for the quickly approaching fiscal year.

This week, WVCBP board president Renate Pore reminded legislators that there’s no more important priority than investing in the state’s young people. Here’s her op-ed in this week’s Charleston Gazette.


The current budget situation is causing concern beyond our borders. Last week, Standard & Poor’s announced it was lowering the state’s bond rating from AA to AA- due to the ongoing budget problems.

Ted was quoted in this State Journal article about the issue: “I think (the report) highlights that West Virginia has a structural revenue problem that it has failed to address.”

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Support for WV Future Fund

Last week Brookings released a report, Permanent trust funds: Funding economic change with fracking revenues, which highlighted why states should design and implement policies like the West Virginia Future Fund.

The report stressed the importance of a “reasonable” gas severance tax, part of which should go into a state trust fund.

“This study not only adds additional credibility to our research on creating a permanent mineral trust fund in the state, but it makes clear that we need to fully fund our state’s Future Fund in order to improve the state’s long-term fiscal health and diversify our economy,” said Ted Boettner in a news release on the report.

The West Virginia legislature passed a bill to create the West Virginia Future Fund in 2014. The bill was amended to remove reliable funding mechanisms, however, and to date has failed to be funded.

Here’s our 2012 report that provides recommendations on how to make the West Virginia Future Fund successful.

Here’s more in the State Journal on the impact to West Virginia’s severance tax revenue projections due to the decline in energy prices and how a healthy West Virginia Future Fund could help buffer the state from future market volatility.

Used with permission from the State Journal

Tax Increase Success Stories

From the Center on Budget and Policy Priorities:

California voters in 2012 raised income tax rates for the state’s wealthiest residents, as well as the state’s sales tax, and dedicated the new revenue to education, which the state had cut deeply after the recession hit. Those changes helped California raise K-12 funding per student by $1,800, as of last year, and better target those dollars to communities with the greatest need, likely improving the state’s workforce down the road.

Minnesota in 2013 similarly raised income tax rates for its wealthiest residents, enabling the state to make a number of promising investments in education. These include providing full-day kindergarten in all public school districts, helping more low-income children afford preschool programs, and offering college scholarships to more low- and middle-income residents.

Read the full CBPP blog post.


West Virginia Training for Trainers – Apply by May 8

A team of West Virginia trainers and the Our Children Our Future Campaign are teaming up with Training for Change to lead a Training for Trainers retreat this summer. Participants will develop a stronger sense of training tools, approaches and choices that will work for them to be most powerful and useful in their work.

This workshop is designed for facilitators, trainers, organizers, teachers and community leaders who convene groups, including those who have been facilitating and training for years and those that are new to these skills. It will prioritize the attendance of a range of participants with regard to location, organization, age, race and gender and accept 26 West Virginians from across the state.

Full and partial scholarships are available. For more information contact Katey Lauer. Go here to apply.

Has West Virginia’s Budget Grown $564 Million in 5 Years?

Earlier today, Delegate Patrick Lane issued a press release calling for more budget cuts as the solution to West Virginia’s budget gap. As part of his argument, Delegate Lane made the misleading claim that the state’s general revenue fund has grown by $564 million in 5 years, which is a reflection of “unchecked” government spending.

However, Delegate Lane’s math only works by carefully choosing particular years to compare, and ignoring their context. In reality, General Revenue, and base budget spending is down nearly across the board, which shouldn’t be surprising after multiple years of budget cuts.

As seen in this chart from his Twitter page, Delegate Lane is comparing General Revenue Spending from FY 2010 to FY 2015. And the chart does show a General Revenue Fund increase of $564 million, from $3.74 billion in FY 2010 to $4.31 billion in FY 2017. But FY 2010 (and FY 2011) were unusual budget years. During the recession, states, West Virginia included, received an infusion of cash from the federal government from the Recovery Act, which they used to prevent budget cuts and back fill their budgets. West Virginia was no different. In those years, the legislature made large cuts to the General Revenue budget, and “backfilled” it with federal stabilization funds.

Two of the major areas that were cut in General Revenue and “backfilled” with federal stabilization funds were State Aid to Schools and Higher Education. A total of $217.9 million was cut from General Revenue funding for Higher Education and State Aid for Schools in FY 2010 and FY 2011, and replaced with federal stabilization funds. In FY 2012, when the federal stabilization funds were gone, General Revenue Funding returned to normal.

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In addition, during those years, the Federal Match Rate for Medicaid increased as part the federal government’s efforts to aid states. West Virginia was allotted over $500 million in extra federal funding for Medicaid from FY 2009 to FY 2011, allowing even further General Revenue reductions. In total, West Virginia was able to cut the budget by $322.7 million in FY 2010 and $183.2 million in FY 2011, and replace it with federal ARRA funds.

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By FY 2012, the federal stabilization funds were mostly exhausted, and the state’s budget was back to normal. And most of the $564 million increase happened between FY 2010 and FY 2012. But it wasn’t due to the state’s budget growing out of control, it was due to the rollback of federal stimulus money. Including the backfill stimulus money, the general revenue fund increased by $241 million, less than half of Delegate Lane’s $564 million figure. That’s a five-year increase of only 5.9%, which is not very remarkable. According to the Bureau of Economic Analysis, total state and local government expenditures have grown an at average annual rate of 4.5% per year since 2000.

And in the five years since the expiration of the stimulus funds, the state’s General Revenue budget has hardly grown at all. Compared to FY 2012, spending in Governor Tomblin’s FY 2017 proposal is down nearly across the board, with the only increases coming from the Supreme Court, Medicaid, and Senior Services, which wasn’t funded from General Revenue in FY 2012. Overall General Revenue has only increased by $184 million from FY 2012 to FY 2017, an increase of only 4.4 percent over 5 years. That’s less than one percent a year, well below inflation.

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In fact, when considering the whole base budget, the increase over the past five years is even smaller, at just $115 million, or 2.5%, as lottery revenues have also declined.

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And it should be noted that DHHR’s increase is due to Medicaid, but overall Medicaid spending isn’t growing as fast as the chart implies. Instead, General Revenue’s share of state Medicaid spending is increasing, though, total Medicaid spending is on the rise.

So in short, Delegate Lane’s claim that the state budget has experienced unchecked growth of $564 million is only true by picking a starting point when the General Revenue Fund was artificially low. When federal stabilization funds are accounted for, the budget’s growth over that time is pretty unremarkable. And since then, nearly every area of the budget has gone down substantially.

Checking in on West Virginia’s Struggling Economy (March 2016 Edition)

West Virginia’s economy has not been faring well lately, with reports indicating the state has slipped back into a recession. Nationally, the economy has seen some relatively strong performances recently, but low energy prices and declining coal production have hurt mining states like West Virginia. Here a some indicators demonstrating the state’s weakening economy.

West Virginia’s unemployment rate for March 2016 was 6.5%, well above the national average of 5.0%. West Virginia’s rate ranked below only Alaska, D.C., and Illinois for the highest rate in the country. West Virginia’s unemployment rate has increased by 0.3 percentage points in the past three months, while the national rate has been unchanged.

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The pace of West Virginia’s decline has picked up recently, even as the national economy grows. Employment in West Virginia has fallen by 500 over the past three months, and the state has lost 5,200 jobs since March of last year. West Virginia is one of only six states to lose jobs from March 2015 to March 2016, and nationally, the economy added 2.8 million jobs over that time period.

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Unsurprisingly, the mining industry is the major source of job loss in West Virginia in the past year. Employment in the mining and logging sector in West Virginia has fallen by 5,700 jobs in the past year, a decline of 20.5%. No other industry has come close to the losses of the mining sector. Both manufacturing and wholesale trade struggled losing 700 jobs each in the past year, a decline of 1.5% and 3.1% respectively, while the construction, transportation and utilities, information, and professional and business services all experienced losses of 500 jobs or fewer in the past 12 months.

In contrast, the retail trade, financial activities, and leisure and hospitality industries all saw employment growth over 1% since last year. Employment in the retail trade industry increased by 1,000 jobs, in the leisure and hospitality industry by 800 jobs, and in the financial activities industry by 500 jobs. Employment also increased by 800 jobs in the education and health services industry, while public sector employment at all levels of government increased by 600 jobs, a 0.4% increase over last year.

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One Way to Make Tax Day Easier for Working Families

Tax Day Relief for Working Families

Yesterday at the state Capitol, legislators joined the Invest in Working Families Coalition to call for support for a West Virginia Earned Income Tax Credit (EITC). Delegates Rohrbach (R-Cabell) and Guthrie (D-Kanawha) spoke about the bill they sponsored during the 2016 Legislative Session.

“Over 2,900 families in my district get up every day and work jobs that pay low wages. They are struggling to make ends meet until a better employment opportunity comes along,” stated Delegate Matthew Rohrbach. “A state Earned Income Tax Credit sends a clear message of dollars and common sense that we support their work and desire to move up the economic ladder.”

“This is as kitchen table as it gets in my district,” said Delegate Nancy Guthrie. “$325 may not seem like a lot but for West Virginians working low-paying jobs, that money will be spent for something important. In District 36, over 4,200 will benefit while spending that money in our local economy. A state EITC provides immediate results now as well as critical investment in West Virginia’s next generation.”

A West Virginia EITC would benefit over 141,000 working families. The tax credit can only be claimed by people who work. Over 160,000 West Virginia children would be helped.

The amount of the tax credit varies based on family income and size. A single mother with two children who works a full-time minimum-wage job could keep over $800 more of her earnings because of a state EITC. A family of four making $36,000 per year could keep over $400 more.

Here’s more in the Huntington Herald-Dispatch and the State Journal.

 

The Facts Behind “Tax Freedom Day”

The Tax Foundation’s annual “Tax Freedom Day” report once again left a strikingly misleading impression of tax burdens – showing an average federal tax rate across the United States that’s likely higher than the tax rate that 80 percent of U.S. households actually pay.

Here’s are the facts from the Center on Budget and Policy Priorities.

Time for More Revenue, Not More Cuts

No word yet on when Governor Tomblin will call a special session of the legislature to address the ongoing budget crisis. In an op-ed this week, Ted lays out the reasons why now is not the time for more budget cuts.

Legislators need to look beyond another round of budget cuts and consider a number of options this spring when they reconvene, including closing corporate tax loopholes, making the wealthy pay their fair share, and enacting higher taxes on things that are making people unhealthy, like tobacco and sugary soft drinks.

Read Ted’s op-ed here.

Slumping Natural Gas Prices Key Reason for Budget Shortfall

While some have blamed the state’s budget crisis on the decline of coal severance taxes, declining natural gas severance taxes are also taking their toll. The decline in mineral extraction, along with a weak economy and major tax cuts phased in between 2006 and 2015, is the central driver of the state’s weak revenue growth over the past several years and into the future. Here’s much more in Ted’s blog post.

Here’s more in this week’s State Journal on balancing the state budget in these challenging times of reduced severance tax revenue.

And here’s an editorial in this week’s Charleston Gazette calling for leadership to guide the state as it enters a post-coal economy. 

Learn More About the Reclaim Act

The Alliance for Appalachia’s Economic Transition Team is hosting a webinar to focus on the RECLAIM Act, which was introduced by Congressman Hal Rogers (KY) in February and is the legislative vehicle moving forward the reclamation piece of the POWER Plus Plan. Congressman Evan Jenkins is a cosponsor.

This webinar will give an overview of RECLAIM and its potential impact on Central Appalachia and other regions with coal-impacted communities. There will be a Q&A session at the end of the webinar.

Register here.

Join Us this Summer! Apply Now for SPI 2016!

Join us for the first-ever Summer Policy Institute this July at West Virginia Wesleyan College!

Applications are due April 30, 2016. Join us for this tuition-free weekend!

Happy Friday!