Gov. Patrick Morrisey walks press through the financial pressures facing the fiscal year 2026 budget during a press conference at the State Capitol Building Tuesday. (Photo by Steven Allen Adams)

CHARLESTON – The white board – once a staple of former governor Jim Justice’s briefings – returned to the Governor’s Reception Room Tuesday morning as Gov. Patrick Morrisey provided more details on a projected $400 million hole in the fiscal year 2026 budget that he will have to provide a plan to fill in 15 days.

In his first week in office in his second press briefing Jan. 16, Morrisey said that as of his first day in office, the general revenue budget for fiscal year 2026 – beginning July 1 and ending June 20, 2026 – shows a $400 million deficit. The projections do not project a deficit for the current fiscal year, which ends Monday, June 30.

“We’re going to be able to get through those budget challenges to the other side. But we’ve been learning a lot more over the last few weeks,” Morrisey said. “We want to learn more, and we are learning more every single day. With that, I said I wanted to be transparent about the budget and what we’re finding.”

Morrisey said past general revenue budgets, including the current fiscal year, have been propped up by one-time monies, the influx of federal dollars from COVID-19 recovery, and shortchanging state departments and agencies by not properly budgeting and using mid-year supplemental appropriations.

“These are all things we’ve inherited,” Morrisey said. “We’re going to fix them. I want to look West Virginians in the eye and tell them we’re going to solve these problems. We’re going to overcome our challenges. We are going to be that shining state in the mountains, but we’re going to have to change how we do things.”

Morrisey said one of the things contributing to the budget hole for the next fiscal year is $153 million needed for the state Medicaid program.

“That shortfall is being funded by one-shot money,” Morrisey said. “Now, I’ll be the first to tell you, you can certainly utilize one-shot money. We’re going to have to utilize some because we can’t fix all the structural problems of the deficit overnight. But if you only rely on one-shot money…you run out of one-shot money and you’re still left with the big deficit.”

Another issue Morrisey pointed out was underfunding state departments and agencies in the general revenue budget to keep the budget flat, then coming back in special sessions and using supplemental appropriations bills to fund the agencies through the remainder of a fiscal year.

For example, Morrisey said that $12 million will be needed in the current fiscal year for the Department of Tourism to fund it through the end of the fiscal year; $22 million needed for Public Defenders Services; and $47 million needed for the Department of Homeland Security/Division of Corrections and Rehabilitation to fund these agencies through the end of the fiscal year. Currently, DHS/DCR will run out of funding by March.

“We know that a lot of the salaries, the medical care, the expenses are set to expire in March,” Morrisey said. “That was intentionally done so that there would be a need to come back to the Legislature. We have to work to find a solution to that.

“That’s a this-year problem, but it’s also a next year problem as well because it builds into the base,” Morrisey continued. “Once again, if you artificially set a number that’s lower than what you think you’re going to spend, then you’re going to have to do a supplemental or you’re going to have to do one-shot money. We’re trying to minimize that, but know we’re left in a very, very difficult position. We will overcome those difficulties.”

Morrisey also pointed to ongoing expenses expected to increase, such as the state’s share of the employee health insurance coverage through the Public Employees Insurance Agency (PEIA). The state pays for 80% of coverage, while employees pay for 20%. In order to comply with the 80/20 split, the state’s share will be $62 million.

Other expenses that could increase include the performance-based funding formula for state higher education institutions, increased costs to implement the Third Grade Success Act, and Hope Scholarship educational voucher program, and a decrease in county property tax revenue that could cause an increase in the state’s school aid formula payout to counties.

Morrisey also said while he supports the recent two personal income tax cuts that went into effect on Jan. 1, those tax cuts have not been paid for in the fiscal year 2026 budget. The 4% personal income tax cut will return $96 million to taxpayers when fully implemented, while the 2% personal income tax will return $46 million.

“I strongly support the ongoing effort to continue to cut taxes. But as you know, I’m very clear last year…I said, please continue to cut taxes, but you must pay for them,” Morrisey said. “The taxes have not been paid for…We’re going to find a way to make that happen. We’re going to drive forward because West Virginia citizens, they deserve a tax break. But we can’t just keep foisting new debt and new obligations on future generations. I care about our kids. We have to think about that.”

Morrisey and his budget and revenue team will have to present the Legislature a balanced budget proposal when lawmakers gavel in for the 2025 60-day legislative session on Wednesday, Feb. 12. Morrisey said they will have several proposals to address the $400 million budget hole, including an ongoing review of state spending in the current fiscal year, consolidating several departments and agencies, and finding efficiencies while eliminating redundancies. Morrisey also said he does not plan to use the $1.3 billion Rainy Day Fund to balance the budget.

“We can’t rob Peter to pay Paul and push all the bills to future generations. We can’t do that anymore,” Morrisey said. “That’s a lot of what we’re seeing. We’re going to be able to address things very, very differently.”