Finance News (Photo Illustration/MetroCreative)
CHARLESTON — West Virginia was given a glowing grade for its financial health, available tax revenue surpluses, and Rainy Day Fund in an annual report.
Truth in Accounting, a non-profit organization that monitors and reviews the short-term and long-term financial health of states, released its annual Financial State of the States report earlier this month in cooperation with the Daniels College of Business at the University of Denver.
According to the report, which looked at fiscal year 2023 data, West Virginia received a B and a state rank of 18 out of 50 states for its financial condition. West Virginia was one of 19 states with B grades, meaning the state ended its fiscal year with a tax revenue surplus once bills and obligations were paid.
West Virginia ended fiscal year 2023 at the end of June 2023 with a $1.8 billion surplus for the general revenue fund, smashing all previous state records. According to Truth in Accounting’s analysis, West Virginia had more than $1.5 billion in available surplus tax collections minus expenses, or equal to approximately $2,600 per taxpayer.
“West Virginia, like most other states, improved its financial condition in 2023,” according to the report. “This is a positive development, and Truth in Accounting applauds the state’s commitment to improving its financial solvency.”
According to the report, West Virginia increased the amount of money available to pay bills by $986 million. In fiscal year 2023, The state received $712 million from the U.S. Department of Transportation through the Fixing America’s Surface Transportation Act.
Personal income tax revenue increased by $474 million, consumer sales and use tax revenue increased by $107 million, and various business taxes — such as corporate net income tax revenue — increased by $82 million.
West Virginia’s total assets in fiscal year 2023 were more than $35.8 billion. When subtracting more than $15.3 billion for capital assets and more than $5.5 billion in restricted assets, that left West Virginia with more than $14.9 billion available to pay bills of more than $13.4 billion, leaving the state with more than $1.5 billion in surplus.
“Even though the primary government’s expenses increased by $1.3 billion, the state had enough money to cover these expenses,” the report continued.
The state’s more than $13.4 billion in total bills included more than $6.2 billion in bonds, more than $6.8 billion in other liabilities, and more than $2 billion in unfunded pension benefits, minus more than $1.5 billion in debt related to capital assets and minus more than $125 million for unfunded retiree health care benefits.
Gov. Jim Justice recently bragged about the amount of tax dollars the state has in reserve, claiming that the state has more than $2 billion in reserve. Justice also credited the maintaince of flat general revenue budgets over the last several years based on artificially low revenue estimates.
“How do we have all these successes? The primary driver is we kept a flat budget,” Justice said. “As long as we keep a relatively flat budget in the state, and we don’t throw away more or grow the budget for the sake of growing the budget and we don’t have a bunch of pet projects and that kind of stuff…a lot of good stuff happens. What’s the flat budget all about? It’s about minding the store.”
According to the State Budget Office, West Virginia has more than $1.3 billion in its two revenue shortfall funds, known together as the Rainy Day Fund. West Virginia has approximately $460 million in the income tax reserve fund to be used in potential economic downturns caused by reductions in personal income tax rates. And the state just ended a special session passing more than $500 million in supplemental appropriations due to ending fiscal year 2024 with more than $826 million in surplus tax collections.
The Truth in Accounting report praised the state for being able to pay its bills and maintain a healthy amount of cash in reserve. However, the report warned of future instability in the economy that could cause the state to fall back on those reserves.
“Although West Virginia ended its 2024 fiscal year in strong financial health…market fluctuations in pension values, coupled with uncertainty around inflation and employment, make it challenging to predict the future resources needed to sustain government services and benefits,” according to the report’s summary of West Virginia’s financial health. “In light of these uncertainties, it’s reassuring that the state has retained funds to cover its financial obligations.”
Steven Allen Adams can be reached at sadams@newsandsentinel.com