WV Legislative Update – June 2021
Please allow this correspondence to serve as a West Virginia government relations update.
I. Budget Performance
The State of West Virginia continues to substantially exceed revenue estimates for fiscal year 2021. Revenues are $389 million above estimate as of the end of May, an increase of 12.6% over fiscal year 2020. When compared to May 2019 (pre-pandemic), revenue collections are up 21%.
There are several factors contributing to the current revenue surplus. An influx of federal stimulus money has led to increased consumer spending, bolstering sales tax collections. The federal stimulus has also increased personal income tax collections. Personal income tax collections were higher due to the tax filing deadline being pushed back from April to May. Oil, gas, and coal severance tax collections are further enhancing revenue collections. Natural gas prices and oil prices are increasing. Steam coal production in northern West Virginia and metallurgical coal production in southern West Virginia have increased over the last few months. Simply stated, West Virginia’s revenue portfolio is performing at historic levels across a variety of categories.
On the highway side of the budget equation, the last tranche of Roads to Prosperity construction road bonds was sold on June 3, 2021. All $1.6 billion of the revenue bonds have been sold at a total premium of $320 million. West Virginia’s bond ratings remain strong.
II. Special Session – Allocating Funds
On Monday, June 7, the Legislature convened for a special session, which coincided with previously-scheduled interim meetings, to approve the transfer of $150 million in general revenue to support road maintenance work around the state. This money will go toward 400 road projects spread over all 55 counties. Projects include bridge repairs, slip repairs on bus routes, and slide repairs on business routes. With the budget surplus described above, legislators felt it was important to appropriate this money so that the Department of Highways can begin purchasing materials. The cost of concrete, aggregate, and other supplies is increasing and is expected to keep increasing with the heightened demand for raw materials across the nation.
Legislators also approved allocations of federal relief funding to the Department of Education and the Department of Health and Human Resources. The passage of HB 2014 from last year will likely lead to more special sessions to allocate federal stimulus dollars, as that bill requires legislative assent for appropriating any revenues received by the state in excess of $150 million.
III. Redistricting
The House and Senate have created select committees on redistricting to establish new legislative districts after the 10-year federal census. West Virginia is set to lose one Congressional seat, so the big question remains how the Congressional districts are drawn. Depending on how the Congressional districts are created, we may have a situation where incumbent members of Congress have to face each other in 2022.
The Joint Committee on Redistricting will be co-chaired by Delegate Gary Howell and Senator Charlie Trump. In addition to creating the Congressional Districts, the Committee will map revised districts for the Senate and House of Delegates. Redistricting is based on federal census data, which is being distributed later than normal this year. The full set of census data is not expected to be complete until the end of September.
IV. Conclusion
West Virginia’s fiscal condition remains as strong as ever, driven by federal stimulus payments, increased sales tax collections, and increased severance tax collections. The legislature will likely have more special sessions than normal due to the fact that they have to approve the allocation of revenues in excess of $150 million as a result of a bill passed last session, and the expected continued influx of federal dollars from the federal pandemic recovery effort. Redistricting will take place later this year, but a joint committee has already been appointed for that purpose and will begin its work as soon as it has all of the most recent federal census data.
Please don’t hesitate to contact me if you have any questions or concerns.
Best regards,
Will Swann