Back to the Future: Overview of Governors Proposed FY 2021 State - - PowerPoint PPT Presentation
wvpolicy.org | @WVCBP Back to the Future: Overview of Governors Proposed FY 2021 State Budget 7 th Annual WVCBP Budget Breakfast T ed Boettner Executive Director Charleston Marriott T own Center West Virginia Center on Budget &
T ed Boettner Executive Director West Virginia Center on Budget & Policy 7th Annual WVCBP Budget Breakfast Charleston Marriott T
January 15, 2020 – 7:30am-9am
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$0 $2 $4 $6 $8 $10 $12 $14
General Fund: $4.59B
(Schools, Health/Human Services, Colleges, Corrections, 3 Branches, etc. )
Special Fund: $1.51B
(Fees, Licenses, Permits, Earmarked Taxes)
Lottery Funds: $468M
(Earmarked for Higher Ed, K-12, Seniors, General Fund, etc.)
State Road Fund: $1.36B
(Gas Taxes, DMV Fees, Federal $)
Federal Funds: $5.78B
(Medicaid/Block Grants /Other)
Total = $13.7 Billon
Governor’s Proposed FY 2021 Budget
Fiscal Year 2021 = $5.053 Billion
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Base Budget = General Revenue + Lottery Funds
Public Education, 41.9% Judicial & Legislative , 3.2% Higher Education, 9.9% Military Affairs & Public Safety, 8.8% Senior Services, 1.4% Health & Human Resources, 23.7% Commerce, 1.9% Administration, 2.3% Other, 6.9% Governor’s Proposed FY 2021 Budget
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Fiscal Year 2021 = $5.028 Billion
Expressed in Millions
Lottery, $501.1 Personal Income, $2,156.2 Severance, $253.8 Sales & Use, $1,422.1 Sin Taxes, $186.0 Other, $98.8 B&O, $126.9 Insurance, $131.8 Corporate Net Income, $144.5
+$173 million in Onetime Reductions (Mostly Medicaid Surplus)
Governor’s Proposed FY 2021 Budget
43% 28% 5% 10%
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Source: West Virginia State Budget Office
Governor’s Proposed FY 2021 Budget
$20 $33 $43 $126 $219 $250 $309
FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20
Assistance Percentage (FMAP) has grown from 71.09 in 2014 to 74.99 in 2020 (1:3.00), a savings of $117 million on $3 billion.
enrollment (552,000 to 502,000)
base building)
Expressed in Millions
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Source: West Virginia State Budget Office
Governor’s Proposed FY 2021 Budget
$150.0 $108.0 $19.8 $7.0 $4.4 $14.9
Medicaid Families First Reserve Fund General Revenue Backfill I/DD Waiver CHIP Child Protective Services Social Services
Expressed in Millions
Other FY 2021 Major Base Budget Increases
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Governor’s Proposed FY 2021 Budget $7 $11 $21 $11.7 $11.2 $3.3 $8.3 $2.8 $0 $5 $10 $15 $20 $25 Tourism TRS Professional Student Support Services Institutional Facilities Operations/Capital Outlay Supreme Court Mountaineer Challenge Academy State Trooper Retirement State Rail Authority
Expressed in Millions
Social Services has grown by $135 million since FY 2010
Base Budget Spending, FY 2010-FY 2021, Expressed in Millions
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Governor’s Proposed FY 2021 Budget
$74.2 $78.1 $90.8 $108.7 $116.4 $135.3 $134.2 $142.5 $150.9 $182.8 $196.1 $209.6 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21
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Source: West Virginia University Business Bureau of Business and Economic Research, Economic Forecasts 2014-2019
Governor’s Proposed FY 2021 Budget
Projected Budget Gaps, FY 2022-FY 2025
FY 22 FY 23 FY 24 FY 25 Expressed in Millions
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Governor’s Proposed FY 2021 Budget
✓ Revenue projections from last year (FY 2020) projected $221 million more in general revenue fund collections for FY 2021. Severance forecast down $174.5 million from last year. In 2016 (FY17) estimated GRF collections were $460 million above this year’s estimate for FY 2021. ✓ Six-Year Financial Plan shows no additional money for Higher Education from FY21-FY24, but substantial growth in Medicaid in FY 2024 (+$106.7 million) and moderate growth in corrections, DHHR, and PEIA. No salary enhancements for two years (+$23m in FY 2023). ✓ State continues to significantly underfund higher education and needs to adequately fund agencies across the board to meet growing needs and pay gaps. ✓ Energy economy (property taxes), lottery and Medicaid surpluses, and declining school enrollment allowing state to fill budget holes. Between FY 2012 and FY2019, lottery funds had an average annual surplus of $68 million or 14%. ✓ West Virginia continues to have a structural budget deficit (spending > revenue) from major tax cuts enacted between 2006 and 2015. State needs to raise additional revenues to meet current needs and to invest in our people and communities to build a stronger economy.
Major Factors Impacting West Virginia’s Budget Changes Over the Last Decade
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December 2007 to November 2019, but up 22,400 from November 2017 (seasonally adjusted).
(July 1).
Governor’s Proposed FY 2021 Budget 726 731 715 717 725 734 732 729 726 717 716 726 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Nonfarm payroll employment, annual average, in thousands
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Source: West Virginia University Business Bureau of Business and Economic Research, Economic Forecasts 2014-2019
1.0% 0.9% 0.5% 0.6% 0.7% 0.4% 0.2% 2013-2018 2014-2019 2015-2020 2016-2021 2017-2022 2018-2023 2019-2024
Governor’s Proposed FY 2021 Budget
WVU BBER Forecasted Average Annual Employment Growth
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Only five counties experienced enrollment growth and 84% was in Berkeley and Monongalia County
Source: West Virginia Department of Education
800 1,800
Kanawha Wood Logan Wayne Boone Raleigh McDowell Mercer Fayette Hampshire Brooke Mingo Harrison Jackson Randolph Roane Mineral Wetzel Nicholas Greenbrier Morgan Marshall Cabell Braxton Mason Hancock Wyoming Grant Lincoln Webster Monroe Pleasants Ritchie Marion Tyler Pendleton Barbour Clay Pocahontas Calhoun Preston Tucker Gilmer Upshur Lewis Doddridge Summers Hardy Ohio Taylor Wirt Putnam Jefferson Monongalia Berkeley
+4,440 5 counties
Student enrollment declined by 20,274 from 2008 to 2021 while local property taxes (local share) have increased (23.7% to 27.9%). If enrollment was at 2008 levels and local share was 23.7%, State Aid to Schools would be an additional $154.6 million in GRF budget.
WV Public Four-Year (HEPC) and Two-Year (CTCS) Fall Headcount, 2008-2018
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Governor’s Proposed FY 2021 Budget
66,070 71,068 71,556 70,894 67,531 65,304 62,419 61,324 60,303 59,339 58,567 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fall Headcount by Year
$32 million reduction from FY13 to FY19, down $124 million from FY 08 (today’s dollars)
Base Budget Spending, FY 2008-FY 2021, Expressed in Millions
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Governor’s Proposed FY 2021 Budget
$507 $487 $459 $468 $515 $528 $497 $488 $458 $452 $437 $454 $496 $496 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21
$620 (2019 dollars)
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Annual Average Growth of General Revenue Fund Collections, FY 1990-2019
Before Major Tax Cuts: 1990-2005 = 5.6% - During Major Tax Cuts 2006-2016 = 1.5% - 2017-2024 = 2.7%
Pipeline Boom
Major Tax Increases
Source: WV State Budget Office
0% 5% 10% 15% 20%
FY 90 FY 91 FY 92 FY 93 FY 94 FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25
Coal Boom
Governor’s Proposed FY 2021 Budget ✓ Major Tax Cuts Enacted ✓ Energy Boom/Bust ✓ National Recession
At 6.8%, FY 2019 GRF collections would be additional $368 million
General Revenue fund collections as a share of state personal income
17 Source: WVCBP analysis of data from U.S. Bureau of Economic Analysis (revised quarterly income data) and WV State Budget Office (September 2019)
7.4% 6.3% 5.5% 5.7% 5.9% 6.1% 6.3% 6.5% 6.7% 6.9% 7.1% 7.3% 7.5%
Average 6.8% (90-06) Phased in tax reductions (CNIT, BFT, Food, and Other): $425 million +
Governor’s Proposed FY 2021 Budget
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$331 million
Progressive Tax Cuts Regressive Tax Cuts Regressive Tax Increases
Grocery Tax Repeal (-$162) Family Tax Credit (-$18) Homestead Tax Cuts (-$8) BFT Repeal (-$150) Cut CNIT (-$69) Manufacturing (-$35) Repeal Charter (-$7) Repeal Inheritance (-$20) Timber Severance (-$4) Workers’ Comp (-$109) Steam Coal Sev. (-$64) Super Coal Credit (-$20) Tobacco (+$80) Online Sales (+$30) Motor Vehicle (+$147) Local Sales (+$74)
Taking Inventory
Shares of Family Income for Non-Elderly Taxpayers, 2018
West Virginia has an upside-down tax system
Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1%
Sales & Excise Property Income 9.4% 9.1% 8.5% 8.8% 8.7% 7.7% 7.4%
Source: Institute on Taxation and Economic Policy, Who Pays?
$130 million tax cut mainly for manufacturers and coal producers (SJR11 – 2019)
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Governor’s Proposed FY 2020 Budget
$99.3 Million Machinery & Equipment
77% 23%
$29.6 Million Inventory
2017
employment growth and/or industrial property tax rates or states that tax BPPT between 2011-2017 (e.g. Texas/South Carolina)
average.
manufacturers need (schools, public safety).
led to significant manufacturing jobs losses in Ohio.
schools and other local budget priorities (fire, police, etc.
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Governor’s Proposed FY 2021 Budget
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$0.0 $1.1 $1.4 $3.1 $5.7 $5.1 $7.9 $21.9 $63.9
West Virginia Future Fund Montana Coal Tax Trust Lousiana Education Quality Trust Fund Alabama Trust Fund North Dakota Legacy Fund New Mexico Severance Tax Permanent Fund Permanent Wyoming Mineral Trust Fund Texas Permanent Univerity Fund Alaska Permanent Fund
Natural resource funds by size (in billions)
Governor’s Proposed FY 2021 Budget
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Governor’s Proposed FY 2020 Budget
Manufacturing Employment Impact of Eliminating the Tangible Personal Property Tax: Evidence from Ohio,” Economic Development Quarterly, Volume 31, Issue 4, 2017
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Governor’s Proposed FY 2020 Budget