Following years of budget deficits and mid-year spending cuts, the Justice administration Wednesday unveiled a $4.35 billion “turn-the-corner” general revenue budget for 2018-19, with $135 million of increased spending for tourism, economic development and social services — and the first across-the-board pay raises for teachers and public employees in four years.
Unlike last year, when Justice proposed $400 million of tax hikes to close massive budget shortfalls — a plan summarily rejected by the Republican-controlled Legislature — his 2018-19 budget proposal includes no tax increases.
Revenue Secretary Dave Hardy noted during the annual budget briefing Wednesday that, a year ago, the administration was facing a $217 million shortfall for the last six months of the 2016-17 budget year, along with a nearly $500 million deficit in the 2017-18 budget.
“Tonight is an exciting night,” he said. “There’s a lot of hope out there. A lot of optimism.”
State revenue collection is up 5.7 percent this budget year, spurred by a 60 percent jump in natural gas prices, stabilization of coal markets and modest growth in private-sector employment, led by a jump in construction jobs.
Meanwhile, Deputy Revenue Secretary Mark Muchow said the long-term outlook appears brighter, spurred in part by a $2.6 billion road construction initiative championed by Justice, with projections for employment growth of 0.5 percent to 1 percent in the coming budget year.
Cushioned by a 15.8 percent return on the $19 billion of investments managed by the state Investment Management Board, and by lower-than-budgeted costs for Medicaid, the proposed budget not only closes a projected $208 million budget shortfall, but increases spending by about $135 million for the 2018-19 budget year.
That proposal includes modest pay raises for teachers, school service personnel and state employees, equal to a 1 percent increase overall.
Including their annual increment pay increases, the proposal would give teachers a nearly $1,000 pay raise, with state employees receiving a $432 increase.
Justice’s proposal also calls for a three-year, $2,000-a-year pay raise for employees of critically understaffed correctional facilities, regional jails and juvenile facilities.
Other major new expenditures proposed in Justice’s budget:
$35 million for economic development. On Sunday, officials with the state Development Office told legislators that funding is needed for business and industrial site readiness and for strategic investments necessary to “close the deal” with businesses considering locating in the state.
Last year, Justice sought $35 million a year over three years to fund his “Save our State” economic development program — a plan rejected by the Legislature.
$14 million for the Division of Tourism, which would nearly triple the division’s annual budget. Hardy said Justice repeatedly has said the state needs to spend more on marketing itself, saying he is tired of always seeing commercials for states other than West Virginia.
“I think the governor has made no bones about it. He believes we need to increase our budget for tourism,” Hardy said.
$23 million for the General Services Division, to fund state buildings in dire need of repair after years of deferred maintenance.
“The roofs are not fixing themselves,” state Budget Office Director Mike McKown commented.
$7 million to subsidize tuition for students attending state community and technical colleges.
$4 million for a 60-person State Police trooper cadet class, the first in four years.
The budget also increases funding for social services, particularly for foster care services, which have seen a spike in costs in light of the state opioid drug crisis.
In his State of the State address, Justice proposed a seven-year, $30 million-a-year phase-out of personal property taxes on industrial inventory, machinery and equipment. However, that proposed cut is not built into the 2018-19 budget, since it requires voters to approve an amendment to the state Constitution that would be on the November general election ballot.
If enacted, the reductions in inventory taxes would not start showing up in state tax collection until the 2020-21 budget year.
Most encouraging, McKown said, is that the economic upturn is projected to provide positive revenue numbers for each year of the state’s six-year revenue forecast, something he said hasn’t happened before in his tenure.
“This is as positive as I’ve ever been at one of these meetings,” he said.
Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220 or follow @PhilKabler on Twitter.