CHARLESTON, W.Va. — Senator Jim Justice claims he turned West Virginia’s financial situation from dire to prosperous during his gubernatorial tenure. However, newly elected Governor Patrick Morrisey has taken a deeper look into the state’s finances and suggests that the reality is quite the opposite, revealing a less rosy financial outlook.
Just a week into his administration, Morrisey disclosed the discovery of an estimated $400 million budget deficit inherited from Justice’s time as governor, with expectations that this gap could widen to $600 million in the coming year. Contrasting Justice’s optimistic claims of a stable financial legacy, Morrisey emphasized that the former administration failed to secure funding for Justice’s unprecedented $1 billion-a-year personal income tax cuts, which comprise a significant portion of the state’s general revenue.
During his upcoming State of the State address, Morrisey is set to lay out a budget strategy that tackles this deficit, proposing the consolidation of various state agencies along with other measures aimed at reducing costs. He underscored the importance of responsibly addressing tax cuts while ensuring there are funds available to cover them. “I advocated for continued tax reductions, but it is critical we find a way to finance these cuts,” Morrssey stated after assuming office.
West Virginia is among at least nine states that have implemented personal income tax reductions since 2021, buoyed by federal pandemic relief funds. Advocates of these tax cuts argue they stimulate economic growth and attract businesses. However, critics, including those at the progressive-leaning Center on Budget and Policy Priorities, caution that the expiration of federal aid and recent costly initiatives, such as new school voucher programs, could challenge the funding of essential services like education and healthcare.
Kelly Allen, executive director of the West Virginia Center on Budget and Policy, described the situation as a “perfect storm.” She explained that the convergence of increased spending and tax cuts, alongside the diminishment of temporary revenue due to expiring federal aid, is creating pressure on the budget.
Justice, a prominent coal mogul who has faced legal challenges related to unpaid debts during his governorship, has been accused of intentionally underfunding state agencies and presenting inflated revenue projections to create the appearance of budget surpluses. He also enacted significant laws, including the extensive personal income tax cuts and the establishment of the Hope Scholarship program, noted for its lack of income eligibility requirements.
In response to Morrisey’s remarks regarding the projected deficit, Justice termed them “crazy talk” and expressed disbelief that such a shortfall exists. He mentioned that if he had anticipated a $400 million deficit, it would have been a cause for alarm.
Justice pointed out the $400 million fund specifically designated for shortfall coverage due to tax cuts, along with a $1.3 billion rainy day fund, which was drastically increased from less than half a million dollars when he assumed office during a projected deficit period. Support for Justice’s claims was echoed by other state leaders, including the state treasurer and legislative leaders, who expressed surprise at Morrisey’s deficit announcement.
Justice frequently reflects on his narrative of financial turnaround, recalling his initial budget veto when he entered office amid a $500 million deficit. He famously equated the budget proposals to cow dung, only to later reveal a platter of gold bars, symbolizing his claims of fiscal revival. From the onset, he emphasized that tax reductions were crucial to revitalizing West Virginia’s struggling economy, exacerbated by the opioid crisis and declining coal industry jobs.
In 2023, Justice sanctioned a 21.25% cut to personal income taxes, followed by an additional reduction of 6% this past summer. Despite ongoing accusations of underfunding state agencies to achieve a balanced budget and create the illusion of fiscal health, Justice maintained that significant progress had been made during his time in office.
Morrisey, who previously served as Attorney General, believes the projected budget deficit results from an over-reliance on temporary federal funding to manage ongoing expenses. A significant portion of the $400 million deficit includes a need to allocate $153 million for Medicaid, which supports nearly a third of West Virginia’s population, in addition to addressing other operational costs related to health insurance and education.
He asserted that rainy-day funds should only be tapped in emergencies, arguing that Justice’s claims of flat budgets were unfounded. “We cannot compromise the financial future by deferring expenses and placing the burden on successive generations,” Morrisey concluded.
