Revenue: Nelson’s cautious approach is warranted
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Families across West Virginia could tell state lawmakers they'd better be cautious about their financial decisions and the budgeting process in the upcoming regular legislative session, but it was encouraging to hear Department of Revenue Secretary Eric Nelson urge such caution to members of the Joint Standing Committee on Finance during this week's legislative interim meetings.
Inflation, national trends in slowed wage growth, another expected interest rate increase by the U.S. Federal Reserve and challenges with federal reimbursements are painting a potentially worrying picture.
"Expectations … are we will see an interest rate increase when (the Federal Reserve) meets in December, and more than likely we'll see that followed by another rate increase in the first quarter (of next year)," Nelson said. "When you combine a higher trending inflation, slowing wage growth and then an interest rate environment, I'll just put a level of caution as we look at our finances going forward."
To frame that caution as being focused on prudent spending is one thing, but Gov. Patrick Morrisey and lawmakers must also be wary of eliminating any sources of revenue without knowing there is something to replace it.
Nelson is also correct to want to keep a close eye on national employment trends, as we know those trends always tend to hit West Virginia harder than some other parts of the country.
Overall general revenue fund collections remain above estimates, though tax revenue was slightly down in October. Whatever magic politicians and policy wonks manage to work on the books to make those above-estimate collection numbers something that has become a matter of routine rather than a pleasant surprise should be examined this year, too.
West Virginians need an accurate picture of what is going on with our money. Lawmakers must heed Nelson's advice. And whatever else, no one must throw caution to the wind when tensions and politicking ramp up in January.