Gov. Jim Justice has suggested a 5% pay raise to offset rising insurance premium costs for public employees, but West Virginia’s Senate Finance chairman says officials will need to calculate how much state government can actually afford to spend.
“You can’t just write checks and then not be able to pay them later,” said Senator Eric Tarr, R-Putnam.
Tarr said the state might have to cut millions of dollars from something else to make way for the kind of pay raise the governor has described.
He said estimates show about 3 percent growth in state revenue year to year. Any legislation that costs additional money would cut into that 3 percent.
He said his rule of thumb is, “As long as we can find someplace else to reduce spending by $170 million for a 5 percent increase and still stay under that 3 percent then I would be comfortable there with what we’re doing right now.
“So the governor is going to present a budget with a 5 percent increase then my suggestion would be to also accompany that with a reduction in spending around that same amount.”
Governor Justice specifically suggested a 5 percent pay raise for state employees and educators after being asked about the possibility during a news briefing this week.
He was reacting to a proposed 10 percent premium increase for many of those same workers who are enrolled in the Public Employees Insurance Agency.
“I’m absolutely going to put forward another 5 percent pay raise,” Justice said. “It should more than offset any raises in PEIA, and we need to do that. We need to accomplish that. Without any question that’s what I’m going to do.
“I hope that will just sail right through because at the end of the day we want people to not be hurt by these increases.”
Earlier this year, the Legislature passed bills to cut personal income taxes, provide raises of about 5 percent for most state employees and change significant aspects of the insurance program for public employees.
One of the changes mandated a return to the 80-20 cost split between the government and the workers. That resulted in a 24 percent premium increase for the current fiscal year. The 10 percent premium increase under consideration would be for the coming fiscal year.
The overview is, state government officials continue to balance the ongoing financial effects of the tax cut, the cost of insurance and other expenses, including possible raises.
“So it’s a very serious thing to do to go in and add another $170 million to the base budget,” Tarr said. “And as long as we keep under that 3 percent growth and the governor can figure out where in his agencies he can go and reduce spending by $170 million then maybe it’s possible.”
The financial effect of the personal income tax cut amounted to about $830 million. That’s before any future cuts that could be prompted by economic triggers.
“Chairman Tarr’s comments today are an explicit acknowledgement that the income tax cuts passed earlier this year came at the cost of adequately funding public services, including competitive pay increases for state employees,” said Kelly Allen, executive director of the West Virginia Center on Budget & Policy.
“We are seeing the consequences of years of flat budgets creating pent-up needs, and even crises, in state programs from child welfare to education, which will only be made worse by Tarr’s zero-sum budgeting approach where something must be cut in order for another program to receive funding.”