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MAP TO PROSPERITY: State finances require more focus

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Something has to give.

In recent years, West Virginia state government has managed to avoid the budget difficulties that have plagued most other states — at least 40, by one count.

But those days may be over.

The reality encountered by most other states could be about to hit West Virginia state government hard. Without changes, it could have a $40 million deficit this fiscal year and a $300 million deficit next year.

This year's budget is already smaller than last year's, which needed a mid-year correction to stay in balance.

With so much of the budget off-limits to cuts — public education and corrections among them — the questions legislators face boil down to two: How much government do West Virginians want, and how much can they afford?

Jim Estep, president and chief executive officer of the West Virginia High Technology Consortium Foundation, said the looming deficits "may be the forcing function that ultimately breaks through the parochialism and regional politics."

Some money can be shifted to gain a little wiggle room. It's possible for West Virginia's economy to grow, raising revenues. The rainy day fund could be tapped. 

But tax increases don't seem to be an option. 

Gov. Earl Ray Tomblin ran for re-election on a "more jobs, lower taxes" platform. Fee increases are possible. There is already talk of budget cuts and a hiring freeze. Cuts in state services seem plausible.

Even as budget concerns grow, there is pressure for more money. Examples include:

 

  • Tomblin's Blue Ribbon Commission on Highways has reportedly identified more than $1 billion dollars in state road needs. It reportedly will recommend raising Division of Motor Vehicle fees and increasing turnpike tolls.
  • The West Virginia Education Association wants more pay for teachers.
  • Senate President Jeff Kessler, D-Marshall, wants some natural gas industry severance taxes set aside for future generations, similar to North Dakota's Legacy Fund.
  • The House of Delegates' Select Committee on Crimes Against Children wants $5.7 million so more state troopers can be hired to fight sex crimes against children. 
  • State parks chief Ken Caplinger has said the parks system needs at least $3 million more a year to adequately maintain facilities.

 

In addition to state budget issues, people may ask the governor and Legislature to fill voids left by federal budget cuts. For example, the federally funded Head Start preschool program in Tucker County was eliminated in October.

Over the coming weeks and months, The State Journal will examine some theories that form the foundation of state government and what it does. We'll look at the size of state government and offer some examples of things it got right and wrong. And we'll see how some states overcame challenges that are similar to ours.

A former state government leader said, "If West Virginia's population had grown since 1954 like the populations of Virginia and Maryland, West Virginia would have a million more people now. 

"You could say we had industries that took an especially hard hit — coal, chemicals, glass. But we weren't special. Look at North Carolina: They had tobacco and textiles. What's the difference? We refused to change."

Perhaps that is harsh. West Virginia has lowered taxes, privatized workers' compensation insurance and made other significant improvements. It has been changing.

But is it enough?

Retired banker Holmes Morrison is fond of quoting former General Electric Chief Executive Officer Jack Welch, who said, "If the world around you is changing faster than you are, then the end is in sight."