(The Center Square) – Despite the economic effect the response to COVID-19 had on the economy across the country, West Virginia will end its fiscal year with a small budget surplus thanks to federal funding, cuts to state government agencies and increasing the reimbursement rate on Medicaid.
Earlier projects suggested West Virginia would have a deficit of more than a half-billion dollars. Gov. Jim Justice now predicts the state will have a surplus of about $10 million, which means the state will meet its constitutional obligation to balance the budget.
“My revenue people told me that we could probably forecast a $525 million deficit,” Justice said. “It was really, really difficult, and we had to try to figure out what in the world to do. … Lo and behold, we’re going to run across the finish line on June 30th with a surplus. It’s not going to be much – it’s probably going to be less than $10 million – but we’re going to go across the finish line with a surplus in a year that our experts predicted we were going to be $525 million upside-down.”
The West Virginia-based, free-market Cardinal Institute had mixed opinions on the announcement. Although Executive Director Garrett Ballengee saw the balanced budget as a relief, he questioned why the government had that much extra money available to cut.
“A lot of people here were just generally kind of nervous,” Ballengee said, noting that the state suffered from a lot of problems similar to other states, including a plummet in sales tax revenue and an overburdened unemployment fund.
Although federal funds took away some of the state's burden, Ballengee said Justice likely will scale back funding from education, health and human services, transportation and higher education. If West Virginia can make all these cuts and still function, Ballengee asked why lawmakers never can find potential cuts during the legislative session. He said it’s “disappointing from a taxpayer perspective.”
Ballengee said, overall, West Virginia government has operated similarly to how it did before COVID-19. He said it didn’t furlough any employees, such as the private sector did, and there weren’t really many disruptions.
Justice also has announced his proposal to distribute CARES Act funding, which includes $200 million for local businesses, $150 million for small businesses, $100 million for highway projects and nearly $700 million to WorkForce West Virginia over the course of two years.