Overview
Governor Jim Justice has proposed what he describes as a “flat” budget for FY 2022, with only minor changes from the FY 2021 budget. While the state budget remained stable during the COVID-19 pandemic, that stability relied on tapping reserves, federal stimulus funding, and other temporary measures. The future budget picture remains troubling, with projected revenues far below initial estimates, while the reserves the state has been relying on to balance the budget are being depleted. In addition, the governor is proposing a major tax overhaul that would both increase overall taxes on the average low- and middle-income household and create an immediate $185 million budget gap.
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Key Findings
- FY 2022 base budget appropriations are $57 million below the final FY 2021 budget.
- The FY 2020 budget was balanced with $300 million in one-time budget maneuvers, including using $150 million in Medicaid reserve funds.
- Medicaid reserve funds are also being used to balance the FY 2021 and FY 2022 budgets. By FY 2025 the reserve funds will be depleted, and by FY 2026 Medicaid will be facing a $153 million shortfall.
- An increase in the federal match for Medicaid under the CARES Act will save the state $300 million in calendar year 2022. Overall, West Virginia citizens, businesses, and state and local governments have received over $7 billion from the CARES Act, which has boosted the economy and aided the budget.
- The governor’s proposed plan to cut the income tax and raise sales and other taxes would lead to an immediate $185 million loss in revenue, while raising taxes on the average low- and middle-income household.
