State Budget OK’d

Legislature makes plans for surplus of $350 million

The Associated Press, April 17, 2005

The Legislature completed its work Saturday by passing a $3.19 billion general revenue budget and voting to appropriate about $350 million in unexpected surpluses.

Earlier in the day, Gov. Joe Manchin had amended the official revenue estimate for the budget year ending June 30. The new projections reflect higher-than-expected collections in taxes and fees, originating mostly from higher energy prices.

Lottery collections were $139.2 million higher than planned in the 2005 budget year, leading the administration to revise the government’s predicted take from $87.8 million to about $227 million.

“We anticipated competition from other states, and we are going to get more competition, but it hasn’t come about yet,” said Brian Kastick, the governor’s public policy director.

According to the new revenue estimate, personal income tax collections were $48.2 million higher, at $1.15 billion. Corporate income and business franchise taxes rose $91.3 million, to $266.6 million. Severance taxes on natural resources increased by $70.5 million, to $232 million.

The surplus helped fund six spending measures meant to supplement this year’s budget. Lawmakers passed all six appropriation bills during a brief special session that followed their passage of the budget bill (HB2005).

The bulk of the surplus, $225 million, was earmarked for an underfunded State Police retirement fund.

“This is one of the issues that was out there, that for many years we had no idea how we were going to fix,” said Senate Finance Chairman Walt Helmick.

Another $10.9 million was appropriated for the merit-based Promise scholarships, to help fully fund the program at about $38 million. This fall will mark the first time the program will fund scholarships to students in all four years of college.

“That makes our Promise a little bit more than we had promised, which was $27 million,” said Helmick, D-Pocahontas. “But we have an agreement with the administration that we won’t go any higher, and that we will find an amount to cap it at some time later this year.”

The Tax Department will receive $22 million to replace an antiquated computer system. The new, integrated system is expected to be completed in three years, and generate about $20 million in increased annual collections.

Already in line to have its budget more than doubled to $703,652 in the upcoming year, the Ethics Commission will receive an immediate $73,000 allotment. Administration officials say the funds will be used to ramp up the commission’s responsibilities.

Not addressed in the supplemental funding is any more money for the state’s Medicaid program, which is estimated to fall about $156 million short in the coming budget year.

“We’ve actually increased the line item for Medicaid by approximately $70 million (in the general revenue budget), but I would submit to you that this is not enough to fund Medicaid properly,” said Senate Health and Human Resources Chairman Roman Prezioso, D-Marion.

Prezioso has suggested that because of federal matching rates, about $38 million would help bridge that funding gap.

“The reason we have not put more into Medicaid is because at this point we have no idea how deep the cuts are going to be from a federal standpoint,” said Senate President Earl Ray Tomblin, D-Logan. “It’s a very fluid situation.”

Other appropriations include:

·  $14.5 million to pay for damage from recent floods.

·  $9.3 million to cover regional jail expenses.

·  $2.5 million to pay for increased enrollment at public schools in high-growth areas like the Eastern Panhandle.

·  $6 million to fund veterans’ bonuses.

·  $1.25 million for maintenance and construction of State Police barracks in Berkeley and Jackson counties.

·  Almost $3 million for tourism projects and promotion.

The state’s budget relies on taxes and fees as well as federal funds, lottery revenue and other sources for a combined spending package of $9.3 billion.