CHARLESTON, W.Va. -- West Virginia's main emergency reserve fund is almost filled to capacity and acting Gov. Earl Ray Tomblin hopes to ask the Legislature next year to increase its limit, lawmakers learned Tuesday.
Revenue Secretary Charles Lorensen told the interim Council of Finance and Administration to expect the general revenue surplus to reach $300 million by the budget year's June 30 end. State law will have half that amount deposited in the state's main "Rainy Day" fund, which is now around $341 million, Lorensen said.
"We're going to be adding to that balance significantly," he told the council, which includes other state officials besides House and Senate members.
But state law also halts deposits once the fund equals 10 percent of general revenue spending. That portion of the upcoming budget is $4.01 billion, and so the state is poised to hit that threshold, Lorensen said.
Lawmakers had increased its limit from 5 percent of the general revenue budget in 2006. House Finance Chairman Harry Keith White, D-Mingo, asked whether Tomblin was considering a 12 percent or 15 percent cap. Lorensen said a review was ongoing, but that Tomblin aimed to include lawmakers before deciding.
At least 37 states cap the size of their reserves, according to the National Conference of State Legislatures. West Virginia is among 13 states that set limits at 10 percent of general revenue collections or spending. Only Maine has a 12 percent cap, while just Nevada and Massachusetts sport the 15 percent limit. The rest have lower caps of between 2 percent and 7.5 percent.
But hitting the caps has not been the prevailing concern among states as they continue to recover from the Great Recession. Fifteen expect to begin the next budget year with empty emergency reserves, according to the National Association of State Budget Officers. The median Rainy Day fund is just 1.3 percent of general revenue spending. West Virginia's reserves also include a second fund, and the two accounts together equal more than 16 percent of next year's general revenue budget - the fifth largest, comparatively, among the states.
"The turnaround of the fiscal condition of this state is a credit to the Legislature," said Lorensen, who was the first secretary of what was then the Department of Tax and Revenue in 1989. "Your accomplishment with the budget, the restraint you show, has West Virginia relatively in a very strong position."
But such robust reserves have lawmakers eyeing other needs. Sen. Brooks McCabe, D-Kanawha and a council member, cited the nearly $8 billion funding shortfall from so-called "other post-employment benefits." Also known as OPEB, these costs mostly reflect health care coverage promised to public employees once they retire. States were called on in 2004 to start calculating the unfunded liability of these benefits.
Lorensen said Tomblin has not considered tapping surplus for these costs. McCabe said the acting governor has not ruled out tackling the OPEB issue during the summer special session expected for post-Census redistricting. The House and Senate must first reach some consensus, McCabe noted.
During this year's regular session, lawmakers considered routing excess revenue surplus to the State Road Fund. While that fund's revenues are $32.5 million or nearly 6 percent ahead of estimates for the budget year, it remains unable to keep pace with West Virginia's repair, maintenance and construction needs.
Tomblin must also prevail in an Oct. 4 special election to remain the state's chief executive next year. The Democrat faces GOP nominee Bill Maloney and the Mountain Party's Bob Henry Baber.
"We need to keep the fund cap and get rid of the tax-and-spend politicians," Maloney spokesman Matt Dabrowski said of the proposal. "How much taxpayers' money is enough for Earl Ray Tomblin?"
Tomblin is state Senate president, and so is acting as governor under the state constitution's vacancy provision. The state Supreme Court mandated the election for completing the term of U.S. Sen. Joe Manchin, who resigned as governor in November after winning a special vote for his new office. The governorship is again on the ballot, for a full four-year term, in 2012.