CHARLESTON, W.Va. -- For the second time in as many years, state agencies are preparing their budgets with a 7.5 percent reduction.
A letter dated Monday from Department of Revenue Secretary Bob Kiss tells all agencies to prepare two budgets - a base budget and one with a 7.5 percent cut. The letter doesn't guarantee any cuts, but state budget director Mike McKown said it might as well.
"As far as I'm concerned, agencies should expect a 7.5 percent cut," McKown said late Wednesday in a phone interview.
Gov. Earl Ray Tomblin called for the same level of cuts last year for the current budget, freeing up about $75 million. McKown said the same cut this year would provide about another $75 million.
It won't be enough, McKown said. The state faces a budget gap of more than $300 million for the 2015 budget year.
The state faced a similar budget gap last year.
As was the case last year, money required for Medicaid is driving the anticipated gap. Last year, McKown estimated the state would need about $180 million more for the 2014 budget year.
Medicaid now needs almost $100 million more than what it's slated to receive during the current budget year, according to Kiss' letter. The costs are not related to Medicaid expansion under the federal Affordable care Act, Kiss wrote.
The state had to take $17.7 million from Medicaid reserve funding in late June to help offset a roughly $93 million shortfall in the overall budget. McKown said the state has "eaten through the trust fund" for Medicaid, and will need to look elsewhere to sufficiently fund the program.
There are other factors to blame, Kiss writes.
"Simply stated, anticipated revenues are not expected to keep pace with the costs of current programs, due to the recent sluggish national economy and a slowdown in the mining of coal," Kiss states.
"Moreover, as we have long anticipated, the trend of declining lottery revenues will continue in FY 2015 due to competition in bordering states."
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Governor will present budget at start of 2014 legislative session