CHARLESTON, W.Va. -- West Virginia cut nearly $18 million from Medicaid reserve funding on Friday in an emergency move to ensure the state would end its budget year Sunday with spending and revenues balanced.
An executive order from Gov. Earl Ray Tomblin allowed for a reduction of up to $20 million to help the state offset a general revenue shortfall projected to total $93 million, or 2 percent below the nearly $4.15 billion the stated expected to collect from these taxes during the budget year.
Acting Revenue Secretary Jason Pizatella said the actual cut was $17.7 million. To avoid a budget deficit, which the West Virginia Constitution forbids, the Legislature had also previously cut $28 million from current spending at Tomblin's request and the state drained a $45 million special account for paying income tax refunds.
Because the cut targets funds to be banked for future budget years, Friday's move will not affect ongoing health care services, Pizatella said.
"This is purely a timing and cash flow issue," Pizatella said Friday, adding, "We will ask the Legislature to restore what we've cut the next time they convene." Medicaid has placed increasing pressure on the state's annual spending plan.
General tax revenues have struggled throughout the budget year to meet estimates, missing their monthly mark six times before June. Declining coal production has been a major culprit. Severance taxes on that fossil fuel and other extracted natural resources were expected to bring in $461.5 million or 10 percent of all general revenues. They began the month down $37.6 million or 9 percent.
The two key sources of general revenue, taxes on personal income and on sales and services, also showed weakness. They together account for nearly 72 percent of general revenue. Sales and use taxes were down nearly $16 million. Income tax collections were in the black, but largely because the state exhausted the $45 million refund reserve account.
The general revenue budget for the fiscal year that begins Monday is $13.7 million smaller than the one lawmakers approved for the current year. Among other changes, the new spending plan reflects cuts Tomblin ordered for most agencies in his part of the executive branch to cut spending.