CHARLESTON — State agencies are being asked to come up with ways to cut a total of $100 million of spending from their current 2019-20 and upcoming 2020-21 budgets, according to the West Virginia Department of Revenue.
With state tax collection falling short of projections for the first three months of the 2019-20 budget year, Revenue Secretary Dave Hardy said Gov. Jim Justice has directed the department to prepare for a possible $100 million state spending cut if revenue doesn’t improve.
“We have held 21 budget hearings with state agencies over the last two months and asked their leaders to identify potential areas for budget cuts, in the event the cuts are necessary,” Hardy said Friday.
Through September, state revenue collection has been running nearly $30 million below estimates, primarily because severance taxes on coal and natural gas have slumped severely, running a $26.4 million shortfall.
Deputy Revenue Secretary Mark Muchow has blamed downturns in coal exports and natural gas prices, along with court actions blocking construction of two major natural gas pipelines, for turning 12% revenue growth in 2018-19 into a deficit early in the 2019-20 budget year.
Hardy said Friday that it is better to build cuts into the budget early on, with the ability to restore funding if the economy turns around later in the budget year.
“It’s just us getting ahead of the numbers,” he said in a statement.
State agencies generally begin putting together budget requests for the next budget year in August and September of the prior year. A $100 million cut would represent just over 2% of the state’s $4.67 billion general revenue budget.
Reach Phil Kabler at firstname.lastname@example.org, 304-348-1220 or follow @PhilKabler on Twitter.