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Technical error causes West Virginia to end fiscal year with unbalanced budget

CHARLESTON — A computer error overnight caused the state to wake up Wednesday to a state budget for fiscal year 2020 $1.4 million under estimates and unbalanced.

“We’re going through a slight technical issue. A bump that’s just happened,” Gov. Jim Justice said. “In the scope of things, it’s absolutely nothing, but at the same time we always want it to be right. These are the kinds of mistakes we don’t want to see happen, but this is a very minute mistake.”

Justice and Department of Revenue Secretary Dave Hardy addressed the discrepancy during Wednesday’s coronavirus briefing at the Capitol.

According to the Department of Revenue, the state ended fiscal year 2020, which ended at midnight Tuesday, with $500,000 above the $4.7 billion revenue estimate for the fiscal year. But when Revenue officials came into the office Wednesday morning, they found that $1.4 million had been withdrawn out of the state’s account.

“We were about a half a million dollars on the positive side of our revenue account, which is exactly where we wanted to be under state law,” Hardy said. “For some unknown reason — and we’re still trying to figure out how and when it happened and what time it happened because we were looking at the books last night as of 8 p.m., there had been a shift of $1.375 million that had moved out of the account.”

Revenue staff have contacted BB&T to determine why the $1.4 million came out of the state’s account and have alerted the State Auditor’s Office to the issue, Hardy said. Revenue officials attempted Wednesday to fix the issue.

“We’re trying to determine what happened, because there is no other explanation, we’ve been able to come up with,” Hardy said. “We’re still trying to determine what exactly caused that computer glitch or computer error of some sort. Our plan is to straighten that up and get ourselves back in the black, which is what we need to do and we’re doing that in consultation with the State Auditor.”

According to a report from the Senate Finance Committee released Wednesday afternoon, the tax revenue for fiscal 2020 of $4.49 billion dollars was 5.44 percent below estimates for the fiscal year, coming in $199 million less than the estimate. The month of June came in 8 percent above estimate, coming in at $506.2 million due to the consumer sales tax coming in 6.84 percent above estimate.

The biggest driver of the state’s deficit for the fiscal year was the severance tax on natural gas and coal. The tax brought in $267 million for the fiscal year, which was 29.9 percent below estimates and 39.6 percent below tax revenues for the previous fiscal year. Personal income tax collections were down by 9.4 percent, coming in at $1.95 billion.

Corporate net income tax revenue of $151.5 million for the year was 3.6 percent above estimates, while the consumer sales tax brought in $1.39 billion, which was only .19 percent below estimate and 1.13 percent more than last fiscal year.

To end the fiscal year with a balanced budget as required by law, Justice issued two executive orders Tuesday. The first order borrowed $68 million from the state’s Revenue Shortfall Fund, also known as the Rainy Day Fund. State code allows for the borrowing of money from the Rainy Day Fund, though the money must be replaced within 90 days. The second executive order impacted four state departments for $198 million.

According to Justice, the state needed to close a $255 million revenue shortfall, which it did by sweeping $186 million from the Department of Health and Human Resources, $2 million from the Department of Education, $1 million from the Department of Commerce and $9 million from the Department of Homeland Security. The remaining $57 million came from the $1.25 billion in federal C.A.R.E.S. Act funds given to the state for reimbursement of coronavirus-related expenses.

The $186 million from DHHR was offset with other funding, including C.A.R.E.S. Act funds, resulting in no reduction in Medicaid services. Additional funding is coming from surplus dollars in the Medicaid line item due to an increase in the federal Medicaid match rate. The remaining $12 million swept from the other state departments came from funds that were set to expire at the end of the fiscal year.

“If you take the reserve monies we had and a little bit of payback money that the state paid out and is able to replenish from the C.A.R.E.S. Act, we run across the finish line in West Virginia with a surplus in the year with the God-awfulest pandemic in the history of the world,” Justice said. “That in itself maybe the biggest accomplishment that we have ever pulled off.”

Justice said tax revenue numbers for July, the first month of the new fiscal year, should come in above estimates once the July 15 income tax filing deadline kicks on. Justice moved the deadline from April 15 to July 15 in March due to the coronavirus and the state shutdown of non-essential businesses.

“We deferred almost $200 million income taxes that are going to flow into July that would have been paid back in April,” Justice said. “That $200 million…is going to hit our books in July and jumpstart us for the future.”

Steven Allen Adams can be reached at sadams@newsandsentinel.com.

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