Gov. Patrick Morrisey on Thursday, Jan. 16, 2024, told media that his administration has found a $400 million budget deficit in the state budget for fiscal year 2026. (Amelia Ferrell Knisely | West Virginia Watch)
Sen. Jim Justice, who promised rocket ship rides and boasted big budget surpluses, has left the new Gov. Patrick Morrisey with a problem: a projected $400 million deficit beginning next year.
Morrisey, who is in his first week on the job, said that the deficit was what his administration had found as of this week.
“We’re talking about what we’ve inherited. It’s not factoring in any new spending priorities or any proposed additional tax cuts,” he said Thursday at the state Capitol in Charleston, West Virginia.
“These problems weren’t created overnight,” he continued. “ … I can tell you that we do believe that there are significant structural problems with the budget, and I’m committed to fixing it.”
The Republican, who campaigned on ending big government spending, said the projected deficit doesn’t mean his administration won’t be able to offer another tax cut to residents or pay raises to teachers. He said they’re still a possibility his administration will address rising health care costs impacting the Public Employees Insurance Agency.
“I’ve been very clear that I want West Virginia to be even more competitive with all the states that we touch,” Morrisey said. “But we’re going to have to look at this, and it’s going to take a while for anyone to go through this … I know that I remain very optimistic despite a lot of the big spending that’s occurred.”
Morrisey declined to put the blame specifically on Justice, saying, “I’m not going to talk about any individuals.” Justice, a Republican, was sworn into the U.S. Senate on Tuesday, forgoing the first 10 days of his Senate term.
Justice faced a $500 million budget deficit when he took office as governor in 2017.
He consistently commented on his work turning around the state’s financial situation, and he regularly touted his multi-million dollar surpluses. Justice was adamant that lawmakers keep a flat budget. Meanwhile, state health leaders said they needed nearly $300 million to address pressing issues in West Virginia, like the substance abuse crisis. Education leaders said they needed $258 million to implement necessary school safety measures amid a national rise in school violence.
Last month, Justice told the Parkersburg News and Sentinel, “For all I know, we do not have a hole for [fiscal year] 2026 at all … the next budget will surely depend on decisions that are made by the next folks that come in and the Legislature and on and on and on.”
This year’s budget bill, passed by the House and Senate on the last night of the 2024 regular legislative session, set the general revenue budget for the current fiscal year at roughly $4.9 billion, 5% less than Justice’s introduced version of $5.3 billion.
Morrisey said on Tuesday that there had been “a lot of spending” in the last few months under Justice, adding that he would be “analyzing that rocket ship ride.” His administration will review a number of recent economic announcements under Justice, and non finalized contracts could be eliminated as he seeks to save money.
“The era of big spending is over. It’s over. In West Virginia, the time for spending beyond our means is over,” Morrisey said.
Already taking steps to address spending
Morrisey said that he expects the state to meet budget goals this year through June 30, the end of the current fiscal year. The shortfall in this year’s budget is temporarily being replaced by a one-time provider tax cash balance, he said.
He emphasized that he already began cutting costs, including an executive order issued on Tuesday that eliminated any state dollars tied to diversity initiatives. Another executive order requires state agencies to make a plan for more efficient spending.
In an effort to save money, Morrisey said that he will work with the Legislature to consolidate the existing Department of Economic Development with the Department of Commerce and to consolidate the existing Department of Arts, Culture and History with the Department of Tourism. The considerations are “an initial step toward making state government more efficient and effective,” according to Morrisey.
He was unable to offer specifics about any potential job cuts in an effort to save money.
Despite the budget hole, Morrisey will push his tax cut in collaboration with the Legislature.
“I do believe that West Virginia needs to continue to emphasize a reduction in taxes to become the lowest in the region,” he said.
Morrisey will present his proposed budget to lawmakers when the regular 60-day legislative session begins next month.
“We will continue to try to garner every efficiency out of state government, because our taxpayers deserve nothing less,” he said.
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