West Virginia Governor Seeks Furlough Authority

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BRADENTON, Fla. – West Virginia Gov. Jim Justice is seeking legislation that would allow him to furlough state employees, a move that he said is in response to the state's recent rating downgrade.

The state's multiyear structural budget imbalance led Moody's Investors Service on Tuesday to lower West Virginia's general obligation bond ratings to Aa2 from Aa1.

The lower rating affects $393.6 million of outstanding GOs.

S&P Global Ratings downgraded the state's GOs to AA-minus from AA in April 2016, and Fitch Ratings lowered its GO ratings to AA from AA-plus in September – both citing similar concerns about the state's budget imbalance.

"Because West Virginia's finances are such a dog's mess, furlough legislation is a necessary precaution to stop the bleeding if we don't act," Justice said Thursday. "West Virginia's credit was downgraded because our state keeps kicking the can down the road, and it will get worse if we don't wake up."

For the current budget year ending June 30, the state expects a deficit of more than $123 million.

For fiscal 2018, Justice has recommended a total budget of $33.5 billion. The general fund portion totals $4.5 billion, although $497 million is unfunded.

In what Justice calls the "Save Our State" plan to close the gap, the governor is proposing $47 million in base budget reductions and limits on the growth in some expenses, as well as increasing the state's 6% sales tax rate by 0.5%, eliminating some sales tax exemptions, and adding a 0.2% tax on commercial gross revenues.

The Republican majority in both chambers of the General Assembly have objected to raising taxes and said they believe state spending is the problem.

"The longer it takes to pass my Save Our State plan and fix the budget crisis, the deeper we'll be in the ditch and it will require furloughs," Justice said.

The governor is also requesting a bill to be filed that would limit the extra pay lawmakers receive for attending any special session.

In addition to a salary, lawmakers receive an extra $150 per day for attending regular, extended, or special sessions.

Last year, a disagreement over rectifying the current year's budget imbalance occurred, leading then-Gov. Earl Ray Tomblin to veto the budget.

Legislators held a special session to pass the budget, narrowly avoiding a government shutdown.

Even if lawmakers spend "umpteen weeks" in a special session to pass a budget, the governor said his bill would limit their extra payments to five days – a move that would cap the total at $750.

"Our lawmakers wasted $600,000 last year because they couldn't come together to pass a budget on time," Justice said. "The people of West Virginia expect action to fix the budget crisis and the pay cap will ensure we aren't wasting time and money to do the job we were all elected to do.

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