Blog Posts > Ted Boettner: More Revenue Crucial to Solve WV Budget Crisis
April 15, 2016

Ted Boettner: More Revenue Crucial to Solve WV Budget Crisis

Charleston Gazette – When lawmakers reconvene this spring to address the state’s looming budget crisis, it is clear that a balanced approach that includes revenue is needed to get our fiscal house in order and help our state’s struggling economy. A cuts-only approach could not only lead to mass layoffs and pain for thousands of families, but it could shortchange our state’s future by investing less in kids and communities. Read

All together, the state is about $558 million short for the 2017 budget year, which begins July 1. While the state has not faced a budget crisis of this magnitude since the late 1980s, this is the fourth year in a row the state has not had enough tax revenue to cover the state’s expenses. It’s time to address this problem, and to do so, it is important to understand how we got here.

On the revenue side, there are two central problems. One is self-inflicted, and the other is not.

Over the last decade the state cut taxes, but this strategy has failed to boost economic growth and has resulted in significantly less tax revenue to pay for things like our schools and roads. Some of the tax cuts mostly helped out-of-state corporations, including phasing out the business franchise tax and lowering the corporate income tax rate to 6.5 percent from 9 percent by 2015. As a result, these two taxes are estimated to bring in only $139 million in 2017, which is $221 million less than they did 10 years ago.

More recently, the state has seen a huge drop in revenue from severance taxes due to lower energy prices and less demand for coal. Last year, the state estimated that it would collect about $525 million in severance taxes in 2017. Now, they are estimating just half this amount or about $263 million. While unprecedented growth in severance tax revenue helped make up for the state’s eroding sales and corporate tax base over the last several years, this is no longer the case.

The result of these tax changes is substantial budget cuts that are impacting our state’s future prosperity. For example, investments at our four- and two-year colleges have plummeted by $124 million since 2008, after adjusting for inflation, while tuition at West Virginia’s public colleges has grown by over one-third during this time. This not only compromises the quality of education students receive, but it makes it harder for students — especially those who grew up in poor families — to afford a college education. West Virginia already has one of the least educated workforces in the country, where nearly 3 out of 4 workers do not have a college degree.

The future of our state depends on the investments we make together today. This means ensuring that all children in our state have the opportunity to thrive, pursue a rewarding career, and become part of the middle class. This means investing in a world-class system of education from preschool to college that will improve the state’s economy and our quality of life.

A budget that supports our shared prosperity and a better future for our children requires a revenue system that can meet our challenges. Cutting investments in critical programs year after year is not going to get us there. Legislators need to look at a number of options this spring when they reconvene, including closing corporate tax loopholes, making the wealthy pay their fair share, and enacting higher taxes on things that are making people unhealthy, like tobacco and sugary soft drinks.

West Virginia has a great tradition of investing in people and communities, and for us to back away from that commitment is to abandon the progress we’ve made.

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