CHARLESTON, W.Va. — U.S. Senator Jim Justice proclaimed he transformed West Virginia’s financial status from dire to prosperous during his tenure as governor. However, newly inaugurated Governor Patrick Morrisey has taken a closer look at the state’s finances and claims the situation is less than favorable. He indicated that the financial conditions left by Justice are problematic, revealing significant issues with the state’s budget.
Just a week into his administration, Morrisey disclosed that he inherited a projected budget deficit of $400 million for the fiscal year commencing in July, which is anticipated to escalate to over $600 million in the following two years. This stands in stark contrast to the optimistic picture painted by Justice, who maintained that he was leaving the state’s finances in stellar condition. Morrisey pointed out that the substantial tax cuts Justice implemented, which amounted to $1 billion annually, were not properly funded, leading to a shortfall in personal income tax revenues that constitute a significant portion of the state’s general fund.
At a press briefing after his inauguration, Morrisey urged the need for accountability: “While tax cuts are essential, they must be funded,” he stated. He committed to identifying and eliminating “waste, abuse, and overspending” in state finances and revealed that his administration had appointed a chief financial officer to manage audits aimed at achieving budgetary savings. Further, Morrisey’s preliminary budget proposal aims to cut spending by 2%, suggesting the consolidation of multiple state agencies and the dismissal of unnecessary boards and commissions.
Morrisey emphasized his role as a reformer, acknowledging the resistance he might face. “I plan to push for change, even if others are resistant to it,” he remarked. “The previous methods just aren’t effective enough in driving progress.”
West Virginia is among multiple states that have enacted personal income tax cuts since 2021, capitalizing on federal funds acquired during the COVID-19 pandemic. Supporters of the cuts argue they can stimulate economic growth and attract businesses; however, critics warn that reliance on these temporary funds and new expenditure commitments could lead to severe funding challenges for essential services such as education, healthcare, and transportation.
Kelly Allen, the executive director of the West Virginia Center on Budget and Policy, referred to the current budget landscape as a “perfect storm,” asserting that the simultaneous occurrence of decreasing revenue from tax cuts and increasing spending commitments is problematic as federal relief measures begin to wane.
During his administration, Justice faced condemnation for underfunding state agencies and manipulating revenue estimates to project artificial surpluses. He also approved laws that could incur rising costs over time, notably a $1 billion annual tax reduction and the expansive Hope Scholarship program, which lacks income criteria.
Responding to Morrisey’s claims, Justice called them “crazy talk” in an interview, expressing disbelief over the alleged deficit. He highlighted that a $400 million reserve fund is allocated precisely for budget shortfalls resulting from the tax reduction measures. Justice also left office with $1.3 billion set aside in the rainy-day fund, a substantial increase from under half a million when he first took office.
Justice’s assertions have garnered support from state leaders, including the State Treasurer and both House and Senate presidents, all taken aback by Morrisey’s remarks. “We don’t share the belief that we’re in quite the same budgetary situation that others have suggested we are,” House Speaker Roger Hanshaw noted.
Justice, who frequently touted his financial success during his eight-year governorship, has often referred to his original veto of a budget with a $500 million deficit, famously using a platter of cow dung to symbolize the state’s financial struggles. He later celebrated what he termed as a turnaround, comparing past circumstances to gold bars in a flourish of rhetoric after overseeing significant tax cuts.
He emphasized that these reductions were designed to stimulate economic growth in a state faced with severe challenges, including the aftermath of the opioid crisis and job losses in the coal industry. The 21.25% personal income tax cut enacted in 2023, followed by an additional 6% cut, has been central to his legacy.
As Morrisey now navigates through what he views as a troubling financial landscape, he accuses the previous administration of financial mismanagement. His projected budget deficit includes $153 million necessary to sustain Medicaid and highlights other critical areas like state employees’ health insurance and educational funding. Morrisey argued that rainy-day funds should be preserved for true emergencies, not used to cover routine costs, asserting that the alleged flat budgets under Justice’s governance never truly existed. “We cannot continue this cycle of short-term solutions that jeopardize future sustainability,” Morrisey stated.