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State budget cuts mounting; reserve fund a suitable option

January 17, 2014

Some West Virginia lawmakers disapprove of Gov. Earl Ray Tomblin’s plan to use money from the state’s Rainy Day Fund to plug a deficit in the state government’s budget.


While their desire to keep the Rainy Day Fund healthy is understandable, it’s also clear rainy days are here in regard to the state’s budget situation. That means it may well be time to pull some money from that fund to meet the state’s constitutional requirement of a balanced budget.


Tomblin’s budget for the fiscal year beginning July 1 totals $4.726 billion, or about $146 million more than expected revenues. To make up part of that gap, he’s proposing tapping into the Rainy Day Fund to the tune of about $84 million.


Using the fund to fill a budget deficit has not been done before, and some lawmakers are worried that it could set a poor precedent, paving the way for the fund to be raided again in the future and hurting the state’s credit rating and financial underpinnings.


The state has been channeling money into the Rainy Day Fund for years, to the point that it now has about $920 million. State officials have boasted about how West Virginia has one of the healthier reserve funds in the country.


Meanwhile, Tomblin has been ordering spending cuts, which are beginning to take a toll, particularly on Marshall University and other higher education institutions in the state.


For the current budget year, universities and colleges, as well as various state agencies, were hit with a 7.5 percent budget cut. Then, just last week, Tomblin ordered a combined $33 million more in cuts for the remainder of this budget year. That means state aid for Marshall will shrink by about $7 million altogether.


But there’s more: Tomblin’s budget plan calls for Marshall and other higher education institutions to expect a further reduction in state aid of 3.75 percent in the coming year. Marshall already has restructured and left positions vacant to absorb part of the reductions, but it still has raised tuition and fees, making the cost of an education higher. Just how much of the cost can be shifted to students and families?


Of course, there is more to the budget picture than colleges and universities. Other factors are at play, including whether the pay raises Tomblin is proposing for teachers, other school personnel and state employees are justified. Also, State Budget Director Mark McKown told lawmakers that he “would think there are still accounts out there with some excess money in them,” a comment that begs the question of why that “excess money” hasn’t been calculated, collected and tossed back into the budget. That should be done.


Another alternative is to raise taxes and/or fees, but that’s not likely to happen.


Borrowing from the Rainy Day Fund seems an obvious answer for the coming year. Officials expect the budget picture to improve within a couple of years, and meanwhile options for shoring up the state’s budget structure should be explored. Even with $84 million removed from it, the fund still will be healthy and the money can be restored during better times.


But for now, it’s time to stop the rain.


— Herald-Dispatch, Huntington