Tomblin presents balanced budget to lawmakers - Business, Government Legal News from throughout WV

Tomblin presents balanced budget to lawmakers as 2012 session starts

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CHARLESTON, WV -

Gov. Earl Ray Tomblin presented a balanced budget to members of the West Virginia Legislature as the regular session started Jan. 11.

Tomblin touted the 1 percent sales tax on food reduction, and the business franchise and corporate net income tax reductions.

Tomblin also talked about the West Virginia Unemployment Trust Fund, which is stable and solvent. He even described the state's rainy day funds as one of the best in the nation, with a surplus of more than $820 million.

The state's budget has been conservative the past few years, and state budget experts have said it's a tight line to walk this year, but it's expected to get even tougher next year.

"We've seen positive growth in personal income tax due to a surge in mining employment, health care industry and professional technical industries because those tend to be higher-wage jobs," said Deputy Revenue Secretary Mark Muchow. "The big story is severance tax continues to drive higher."

Muchow said the state is projecting a surplus for the current fiscal year, with a projection of $100 million by the end of the year.

"From a revenue standpoint, our only concern is the increased volatility in the make up of the general revenue fund," he said.

Muchow said the state's per capita income has grown to 80 percent of the national average per capita income.

"The last time we were there was the late '70s," he said. "But there are consequences. The federal match rate is going to decrease."

Medicaid will continue to be the biggest budget driver for the next several years.

Mike McKown, director of the West Virginia State Budget Office, said the governor's budget allocates 48.6 percent to public education, which is higher than the past five years. The West Virginia Department of Health and Human Resources gets about 19 percent.

No pay raises are in the governor's budget this year except for the automatic 1.5 percent allocated for teachers every year built into the system.

"We get into some structural budget gaps of over $300 million," McKown said. "If we keep all programs at current levels … we either have to make budget cuts or we have to find other revenues to supplement these budgets, or do you use the Rainy Day Fund? This is a planning tool."

McKown said the past six or seven years have shown gaps in funding for future years to aid in the current year's budget planning, so the gaps will be closed by the next year.

"Every dollar you spend this year makes next year worse," he said.

McKown said he has been putting together the state's budget for the past six years, and this year has been the hardest.

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