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FY 2014 Budget Preview

The governor’s FY 2014 budget was released this week. We’ll have our full analysis of the budget next week, but for now, here’s a preview:

Revenues are expected to be down, with the General Revenue Fund projected to bring in $4.140 billion, a $9 million decrease from FY 2013. And while the Lottery Fund is expected to bring in $137 million, $8.3 million more than last year, the Excess Lottery Fund is expected to fall by $10 million, to $164 million. Surplus funds from previous years are also expected to be smaller than last year. 

Recommended appropriations from the state’s General Revenue, Lottery, and Excess Lottery Funds total $4.457 billion for FY 2014. Public education makes up the largest slice of the budget pie, totaling $2.081 billion. The next largest piece of the budget belongs to Health and Human Services, which includes state spending for Medicaid, with appropriations totaling $930.8 million, followed by Higher Education, with appropriations of $480.6 million.

Total Appropriations – General, Lottery, and Excess Lottery Funds – Governor’s FY 2014 Recommended Budget (Millions of Dollars)

Source: Governor’s FY 2014 Executive Budget 

Due to declining revenues and rising health care costs, Governor Tomblin ordered state agencies to cut spending by 7.5 percent to keep the budget balanced. While some areas of the budget were spared from cuts, due to statutory and constitutional requirements, other areas saw sharp cuts. Higher education will experience the biggest cut, with a reduction of $34.8 million, while DHHR will see a $10.9 million cut. A total of 13 departments will split the $75 million in cuts.

 Source: Governor’s FY 2014 Executive Budget

 

On first glance, the state seems to be in stable financial condition, as it has in previous years. But the state’s fiscal position is precarious; while revenues are down, the full impact of the cuts to the corporate net income and business franchise taxes have yet to be felt, and the governor has highlighted an additional $40 million in tax cuts this year. Without these cuts, thee state’s fiscal outlook would be much more positive, and this year’s spending cuts would have been unnecessary. And while the state continues to find ways to fund its share of Medicaid, structural problems in its funding are beginning to surface. Keep an eye out for our full report on the budget next week, where we will address these topics and more.

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