CHARLESTON — The governor’s office is projecting a $108.6 million revenue decline for Fiscal Year 2021 and is taking a hold-the-line approach on spending.
The one exception is the Department of Health and Human Resources, which will see increases to the I/DD Waiver program and Child Protective Services and creation of a Medicaid Families First Reserve Fund.
Revenue Secretary Dave Hardy and Deputy Revenue Secretary Mark Muchow outlined the proposed budget for the press at a meeting before the State of the State Address.
Looking back, Hardy said FY 2019 had record growth so the state was able to channel some of that growth into one-time spending.
Highways received $104.2 million; the PEIA Reserve Fund got $105 million, which has allowed for two subsequent years with no premium or benefit changes. The Rainy Day Fund got $57.4 million.
In the area of Medicaid, declining enrollment (552,000 in July, now 502,000) plus improved management and turning pharmacy benefits over to a managed care program ($54.5 million in savings) has helped grow the Medicaid fund balance from $42 million in 2015 to $309 million now, he said.
Severance tax declines from lower natural gas prices, declining coal production and halting of two pipeline projects have contributed to FY 2020 estimates not meeting expectations. Halfway through the year (which began July 1, 2019) revenue is $33 million below estimates. However, mid-year budget cuts that were under consideration came off the table as of December, Hardy said.
For FY 2021, the $108 million shortfall will be made up with some one-time money. DHHR improvements will be funded in part from Medicaid program savings.
Among those, the I/DD Waiver waitlist of about 1,060 people will be eliminated by adding $19.7 million to its current $89 million budget.
Child Protective Services will get a $26.4 million boost, with $7 million going to CHIP, $4.4 million for CPS workers and $14.5 million to social services. The new Medicaid Families First Reserve Fund will get $150 million and will function like the Rainy Day Fund or PEIA Reserve Fund: The governor will be enabled to call upon the Legislature to release money from it in times of need.
Additionally for DHHR, a children’s Back Pack Program will receive $2 million to provide kids with backpacks they can stock with food to take home on weekends. And state food banks will get an additional $1 million.
Overall Muchow said, state general revenue grew 3.7% in FY 2018, 12.2% in 2019, and is running at minus 1.4% so far this year. FY 2020 is projected to end at minus 1.3%.
FY 2021, Muchow said, general revenue is expected to be $4.585 billion, a 2.3% or $108.640 million decline from this year, which is estimated at $4.694 billion. Personal income tax revenue will grow, from $2.155 billion this year to $2.156 billion in 2021. Sale and use tax revenue is also expected to grow, from $1.390 billion to $1.422 billion.
But severance taxes are projected to take a substantial hit, falling $106.4 million – from $360.2 billion this year to $253.8 million in FY 2021. Tobacco tax revenue also is expected to fall, due in part to federal legislation raising the legal tobacco-use age to 21. Tobacco revenue is expected to decline about $21.6 million, from $177 million to $155.4 million.
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