(The Center Square) – West Virginia is one of the few states to decrease overall state spending in fiscal year 2020, according to an annual report from the National Association of State Budget Officers (NASBO).
According to NASBO’s 2020 State Expenditure Report, state spending partially declined because of cuts in response to economic uncertainties surrounding the COVID-19 pandemic. Total state expenditures decreased from just under $17.95 billion in 2019 to just over $17.73 billion, which amounts to a 1.2% decrease.
West Virginia saw a decrease in corrections expenditures from $363 million to about $293 million, which is more than a 19% reduction. It also saw a significant decrease in many of the miscellaneous categories, such as “all other expenditures” and “other capital expenditures,” which account for spending and projects that don’t fall into any major category. There were small cuts to transportation, as well.
When the COVID-19 pandemic hit, Gov. Jim Justice slashed spending that was meant for federal agencies. It also saved money because of an increase in the Medicaid reimbursement rate and receiving federal assistance. The free-market Cardinal Institute for West Virginia Policy criticized the state at the time because it said the state should not have been spending so much money on state agencies in the first place.
The state’s largest spending increase was in elementary and secondary education, which went up from about $2.38 billion to about $2.47 billion – about a 5.5% increase.
“Before the onset of COVID-19, some states took steps to increase teacher compensation, improve teacher recruitment, reform school funding formulas, and add funding for early education, school safety, counseling, special education, etc.,” Brian Sigritz, the director of state fiscal studies at NASBO, told The Center Square.
West Virginia’s assistance from the federal government grew by about 1.2% over the fiscal year, partially because of federal assistance related to the COVID-19 pandemic. Nationally, funds grew by about 14.1%.
The state was required to cut spending because of a 5.5% decrease in total revenue over the past year, and the state has a constitutional requirement to pass a balanced budget. The state ended the fiscal year with a small surplus.
Jessica Dobrinsky, a policy development associate at the Cardinal Institute, told The Center Square that going into 2021, the state should focus on cutting additional spending because it must prepare for an additional decline from the COVID-19 pandemic.
“Although the pandemic created challenges and impacted the financial conditions of state spending and revenue, it is imperative to find ways to cut spending and adapt to the new challenges we will soon face as federal aid begins to run out in 2021,” Dobrinsky said. “During the time of government-mandated closures, assistance to families in need was vital. However, states must prepare for a further decline in the upcoming fiscal year. Therefore, each state legislature and executive seat should work to reduce spending and address the ongoing decline in tax revenue due to shutdowns and unemployment.”