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TOMBLIN DELIVERS STATE OF THE STATE ADDRESS BUDGET DOESN’T INCLUDE RAISES, PRISON FUNDING


Publication: CHARLESTON DAILY MAIL
Published: Thursday, January 12, 2012
Page: 1
Byline: JARED HUNT DAILY MAIL CAPITOL REPORTER

Gov. Earl Ray Tomblin isn’t budgeting for any state employee pay raises or new prisons next year as the state digs in to shore up a more than $300 million gap in funding for Medicaid.
That’s to ensure taxpayers won’t have to absorb any new taxes to foot the state’s growing health care bill.
Tomblin is submitting a $4.5 billion balanced budget to lawmakers this week for the state fiscal year that begins July 1.
The budget relies on $4.1 billion in general revenue tax collections — about $134 million more than last year. Additional revenue will come from leftover surpluses from the prior fiscal year and lottery proceeds.
The budget will grow by about $126 million over the $4.4 billion budget signed into law last year.
The biggest growth in spending can be tied to one word: Medicaid.
The state will funnel more than $3 billion into Medicaid, the health care program for the poor, next year.
The federal government’s share of the Medicaid tab fluctuates with the state’s economy and will fall from 72.62 to 72.04 percent.
While the difference is only a fraction of a percent, it represents a large number of actual dollars.
“That particular decline translates into an additional $17 million in state money to keep program dollars the same,” Deputy Revenue Secretary Mark Muchow said Wednesday.
The federal government reevaluates its share of the state and federally funded program each year. The federal contribution goes down as the state’s per capita income increases, and West Virginia’s has in recent years.
Changes enacted under President Barack Obama’s health care act will expand the program and its costs even further.
State Budget Office Director Mike McKown said budget officials are projecting Medicaid costs will soar to $3.5 billion over the next two years. Every reserve except for the state’s Rainy Day Fund is being drained, he said.
The state was able to build up a Medicaid trust fund using money from federal stimulus programs in recent years. Now it is starting to tap that reserve.
McKown said that fund held $390 million last July 1. By June 30, it will be down to $157 million.
Next fiscal year the state will burn through all of that and need still more to fund the program.
Tomblin’s proposed budget devotes an additional $111 million to Medicaid.
Even more pain awaits the following year.
“It was tough this year balancing the budget, and next year is going to be tougher,” McKown said. “To keep all programs going at current levels is going to require another $201 million of state dollars.
“Fundamental adjustments or changes are going to have to occur to Medicaid, or all of our monies are going to end up there,” he said.
Muchow said officials anticipate modest growth of 1 percent over the coming years. However, he noted that a feared downturn in Europe could have a major impact on revenue sources like the coal severance tax.
The state depends on a greater percentage of severance and income taxes than it did in prior years, he said.
He said those taxes are more volatile and difficult to forecast than the sales tax, for example, and they accounted for about 61 percent of general revenue collections last year.
“We are much more heavily reliant on volatile sources of revenue,” Muchow said.
Tomblin Chief of Staff Rob Alsop said the governor is looking into ways to slow the growth of the Medicaid program.
“We’re looking at every practice and policy standpoint that we can do to make the Medicaid program sustainable over the coming years,” Alsop said.
“There’s going to be a hard look at the Medicaid program to see if we can find a way to make the program cost less.”
He said the governor’s main goal is to get “over the hump” in the 2014 budget. After that, the projected increases in the program are expected to level off somewhat.
Tomblin will propose an increase in the legal cap on the state’s Rainy Day Fund so the projected surplus from the current fiscal year can be used to boost reserves.
After the fund reaches the new maximum level, he will propose taking 50 percent of any future surpluses to help shore up the state’s road and infrastructure funds.
But Alsop said lawmakers’ proposal to build a new 1,200-bed prison is off the table.
“We’re not budgeting $200 million for a new prison,” he said.
He said if the state started building one today, it still would have an overcrowding problem by the time it was finished. Instead, the administration will push for other measures to ease the problem.
Next year’s budget does include $14 million worth of new spending to pay the Division of Corrections’ increasing bill to state regional jails. The regional jails are housing about 1,700 corrections inmates because of a prison bed shortage.
Aside from growth in Medicaid and corrections, the only other substantial increase in the budget is about $32 million in additional funding for social service programs within the state Department of Health and Human Resources.
The budget includes the 2 percent increases in pay for teachers and state employees that were passed by the Legislature last year.
Beyond the 1.5 percent salary increases state code calls for teachers to receive each year, the budget contains no other pay raises for state employees.

CRAIG CUNNINGHAM/DAILY MAIL
Gov. Earl Ray Tomblin greets legislators and other dignitaries as he enters the House of Delegates Chamber at the state Capitol on Wednesday evening.

State Agriculture Commissioner Gus Douglass enters the House Chamber for the governor’s speech. Behind him is Treasurer John Perdue. Douglass has said he will not seek re-election when his term ends this year, while Perdue plans to run again.

Several special guests, including these members of the military, were seated in the galleries of the House Chamber during the governor’s speech. The governor said he wanted to express “heartfelt thanks” to troops coming home from the Middle East. At right, State Supreme Court Chief Justice Menis Ketchum enters the House Chamber followed by fellow Justice Tom McHugh.


Contact writer Jared Hunt at jared.hunt@dailymail.com or 304-348-5148.

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