New Brief Examines WV’s Temporary Budget Surplus, FY 2023 Proposed Budget Allocations and Implications

For Immediate Release: February 23, 2022
Contact: Renee Alves, 559-916-5939

Charleston, WV – For the second year in a row, Governor Jim Justice has proposed a “flat” budget for Fiscal Year (FY) 2023, with only minor changes from the FY 2022 budget. While the state is currently enjoying large budget surpluses, those surpluses are the result of billions in federal aid, artificially low revenue estimates, and continued unpredictability from the pandemic. Despite the temporary nature of these surpluses, the West Virginia Legislature is pursuing permanent tax cuts that would overwhelmingly benefit the wealthy, while continuing to neglect public programs and services that are in desperate need of investment. And once again, the governor did not include a six-year plan in the budget, leaving the future budget picture murky, and questions about potential budget deficits unanswered.

Our new issue brief, Flat Budgets, Flat Expectations: The West Virginia Fiscal Year 2023 Budget Proposal, examines how the state arrived at its current budget surplus (and why we should be wary of the surplus as an indicator of financial strength), the details of the FY 2023 proposed budget allocations, and how these spending plans could compromise the strength of future West Virginia state budgets. This brief was authored by WVCBP senior policy analyst, Sean O’Leary.

Key Findings:

• FY 2023 base budget appropriations are $123 million above the FY 2022 final enrolled budget.
• Most of the increase in the FY 2023 budget comes from a proposed public employee pay raise, at $108 million.
• While FY 2022 revenue collections are already $531 million above that year’s revenue estimate, the revenue estimate for FY 2023 is only $75.8 million more than the FY 2022 estimate, which will likely lead to another year of large, artificially-inflated surpluses.
• With the pandemic ongoing, the increased federal match rate for Medicaid under the CARES Act is expected to stay in effect in 2022, saving the state an estimated $200 million. However, budget projections from the Department of Health and Human Resources show significant budget shortfalls for Medicaid in the coming years.
• While the state is currently enjoying a budget surplus, proposed plans to cut the income, severance, and property taxes could jeopardize future budgets.

“West Virginia was fortunate to make it through another year of the pandemic and recession without any significant budget problems,” says O’Leary. “But without both federal aid and artificially low expectations, the surpluses the state is currently experiencing wouldn’t exist. And instead of using these temporary surpluses to make needed investments that benefit all Mountaineers and carefully plan for future budget requirements, West Virginia lawmakers are once again pursuing expensive and ineffective tax cuts that disproportionately benefit the wealthiest in our state.”

You can read the full issue brief here.