Legislative session opening with West Virginia’s good, bad rankings as a backdrop

W.Va.’s rankings offer backdrop to session

CHARLESTON, W.Va. — West Virginia lawmakers are keeping an eye on the state’s standing when compared to its 49 peers as they tackle a tight budget and related issues during their 60-day regular session.

House Majority Whip Mike Caputo is among the Legislature’s Democrats who contrast West Virginia’s fiscal health with that of other states. A number of them face major cuts to services and programs to avoid budget deficits.

Gov. Joe Manchin, a fellow Democrat, is touting a recent report that ranks West Virginia behind only one other state for economic momentum.

But Republican lawmakers cite a different set of statistics, as they prepare to push for major tax cuts and a smaller state government. These rank West Virginia poorly for business climate and income levels.

The House and Senate begin the 2010 regular session Wednesday, when Manchin will also deliver his State of the State address and a proposed budget for the fiscal year that starts July 1.

On the heels of midyear cuts to this year’s spending plan, Manchin’s proposal is expected to reduce the general revenue portion of the next budget by 4 percent for education and by 5 percent for much of the rest of state government.

This belt-tightening reflects damage to state revenues from what some have dubbed the Great Recession. As the National Conference of State Legislatures recently observed, “despite a growing consensus that the national recession — the principal cause of state fiscal problems — has ended, state finances will not recover in the near term.”

But as he prepares to unveil his 20- to 25-item legislative agenda, Manchin has taken heart from West Virginia’s second-place ranking in the latest Index of State Economic Momentum. Compiled by Federal Funds Information for States, it measures growth in personal income, employment and population. The state ranked behind only North Dakota for the third quarter of 2009.

Manchin invoked the index last week, at The Associated Press’ annual Legislative Lookahead forum. He noted the painful choices confronting other states, including neighboring Virginia where highways workers face layoffs even amid rough winter weather.

“It’s just a fiasco out there,” Manchin said.

Caputo, D-Marion, cited the index as well as findings from December’s Fiscal Survey of the States. The National Governors Association and the National Association of State Budget Officers found 42 states forced to cut current spending by a combined $31.6 billion.

While West Virginia is bracing for across-the-board cuts, the survey found tougher steps elsewhere. Three of West Virginia’s neighbors — Pennsylvania, Ohio and Virginia — are among 13 states increasing fees. They and neighbor Kentucky are among 26 states that have laid off, furloughed or offered early retirement to employees.

“We may not move as fast as others during the recovery, but we aren’t in the dire straits that other states are in,” Caputo said.

GOP legislators hold a much different view. Mindful of West Virginia’s basement rankings for per-capita income, they propose further cuts to consumer and business tax rates.

“If you put more money in the hands of West Virginians, working West Virginians, they will use it to put their children in college, to buy homes, to do things that improve our economy,” said House Minority Leader Tim Armstead, R-Kanawha.

The Washington, D.C., based Tax Foundation would agree. It ranks states by how favorably their tax systems treat business. Despite modest, ongoing cuts to corporate net income and business franchise taxes, West Virginia placed 37th nationwide in the foundation’s report for the current budget year. The state had ranked one place better in 2009.

The foundation noted that West Virginia’s standing could improve from future, scheduled cuts. But it also included West Virginia among six states, including neighboring Maryland and Ohio, “where the tax base is found to cause an unnecessary drag on economic activity.”