It was close, but West Virginia state government ended the fiscal year recently with enough money in the bank to cover the current year’s spending plan. That is good news, but it also is a warning of clear and present danger.
Earlier this year, state legislators found they were unable to cover dramatic increases in the Medicaid program’s cost for this year by relying solely on revenue expected to be collected during the current 12-month period. So, lawmakers agreed to factor into the Medicaid budget about $65 million in “surplus” funds from the fiscal year that ended June 30.
At the time, that seemed safe. After all, the state has been ending fiscal years with surpluses at or sometimes substantially above $100 million. Counting on two-thirds of that was not viewed as imprudent.
Then revenue collections began to slump. For a few months there was concern the year-end surplus would not be enough to cover even the Medicaid pledge.
Ultimately, the year-end surplus totaled $87 million. That certainly is a relief.
Again, however, it also shows some sources of revenue, such as legalized gambling and coal severance taxes, may not produce what they did in the past. West Virginia’s lengthy monopoly on legalized slot machines and racetrack casinos is over. Competition from Pennsylvania already is reducing state revenue. Ohio casinos are coming on line and Maryland is getting into the “game.”
Meanwhile, President Barack Obama’s war against the coal industry has resulted in idled mines and hundreds of lost jobs in West Virginia. Severance tax revenue will decrease as coal production drops.
Clearly, state officials need to be looking at austerity budgeting — and planning for it now, not later.
— Distributed by The Associated Press