west virginia higher education board of governor’s summit august 1, 2014 state budget office 1
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State of West Virginia’s Budget Forecast
West Virginia Higher Education Board of Governor’s Summit
August 1, 2014
State Budget Office
1
2
The West Virginia Fiscal Picture
Little or No Revenue Growth in FY 2014 or FY 2015
Coal Mining production in decline; Gas is picking up slack
Foreign Exports key
Baby Boomers becoming senior citizens
Teacher Retirement System: Only 19 More Years Funding with 10%+ of Total General Revenue
Workers’ Compensation Solvent by CY2016?
3
National Fiscal Concerns
Federal funds make-up 1/3 of WV’s State Government Budget
Federal Health Care & Medicaid – effect on economy?
Future perpetual Federal budget deficits are still predicted
Medicare, Medicaid & Social Security make up almost 2/3 of Federal spending
Federal Government's accumulated debt continues to grow - $17.6 TRILLION
(debt per citizen > $55,000, debt per taxpayer > $151,000)
US GDP as of July 2014 = $17.3 Trillion
4
210,895,129
899,709,097
100,000,000200,000,000300,000,000400,000,000500,000,000600,000,000700,000,000800,000,000900,000,000
1,000,000,000
MCF
5
130,237,890
141,385,489
113,825,776
100,000,000105,000,000110,000,000115,000,000120,000,000125,000,000130,000,000135,000,000140,000,000145,000,000150,000,000
2009
0820
0911
2010
0220
1005
2010
0820
1011
2011
0220
1105
2011
0820
1111
2012
0220
1205
2012
0820
1211
2013
0220
1305
2013
0820
1311
2014
0220
1405
Tons
6
$3,605.2
$3,881.6
$2,000.0$2,200.0$2,400.0$2,600.0$2,800.0$3,000.0$3,200.0$3,400.0$3,600.0$3,800.0$4,000.0
$ M
illio
ns
Manufacturing Exports
7
$7,497.8
$4,027.4
$0.0
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
$7,000.0
$8,000.0Ja
n-07
Jun-
07
Nov
-07
Apr-
08
Sep-
08
Feb-
09
Jul-0
9
Dec-
09
May
-10
Oct
-10
Mar
-11
Aug-
11
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
$ M
illio
ns
Non-Manufacturing Exports
8
State of West VirginiaFY 2014Summary
General Revenue:Estimated Collections $4,136,001,000Actual Base Collections $4,036,104,603Shortfall -$99,896,397
One time revenues $70,000,000Mid-year budget cut $33,000,004
Actual Surplus from FY14 activity $3,103,607
Lottery Funds:Anticipated Surplus $30,000,000
Actual FY14 General Revenue collections only $2 million higher than FY13'sAdded $171 million of base state funding for MedicaidNo layoffs or furloughsGenerally agencies took a 7.5% ATB budget cutGood cash flow - paying bills on time100% of retirement contributions madeBond ratings still holdNo use of Rainy Day fund
9
State Of West VirginiaGeneral & Lottery Revenues
(in millions $)
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19General Actual Actual Actual Actual Actual Estimate Estimate Estimate Estimate Estimate
Personal Income Tax 1,447 1,593 1,689 1,746 1,664 1,810 1,908 2,061 2,165 2,263Sales / Use Tax 1,096 1,148 1,216 1,193 1,173 1,254 1,279 1,313 1,367 1,420Corporate Net Income 233 303 188 238 204 202 173 171 182 188Severance Tax 400 441 468 410 489 475 531 549 537 512All Others 582 579 542 517 576 513 504 550 550 552
total 3,758 4,064 4,103 4,104 4,106 4,254 4,395 4,644 4,801 4,935% change 8.1% 1.0% 0.0% 0.0% 3.6% 3.3% 5.7% 3.4% 2.8%
LotteryRacetrack Video 275 258 274 226 174 156 153 153 153 153Limited Video 199 199 265 200 188 191 191 191 191 191Traditional Games 40 36 46 47 31 36 36 36 36 36Table Games 17 32 38 36 32 22 22 22 22 22
total 531 525 623 509 425 405 402 402 402 402% change -1.1% 18.7% -18.3% -16.5% -4.7% -0.7% 0.0% 0.0% 0.0%
Note that FY14 Lottery numbers are estimated
10
2008
2009
2010
2011
2012
2013
2014
$220 $230 $240 $250 $260 $270 $280 $290 $300
WV State Funding Per Capita
2008
2009
2010
2011
2012
2013
2014
-
5
10
15
20
25
30
Rank (#1 = Highest)
WV
Ran
kin
g O
ut
of
50
11
2008
2009
2010
2011
2012
2013
2014
$7.20
$7.60
$8.00
$8.40
$8.80
WV State Funding Per $1,000 of
Personal Income
2008
2009
2010
2011
2012
2013
2014
- 2 4 6 8
10 12 14 16 18
Rank (#1 = Highest)
WV
Ran
kin
g O
ut
of
50
12
State of West Virginia
General & Lottery Appropriations
% of % of
Department FY 2009 total FY 2015 total
Public Education $ 1,918,411,298 44.24% $ 2,070,210,565 44.94%
Health & Human Resources 862,091,049 19.88% 1,038,529,728 22.55%
Higher Education 483,015,423 11.14% 475,060,375 10.31%
All Others 1,073,107,891 24.75% 1,022,589,390 22.20%
Total $ 4,336,625,661 $ 4,606,390,058
13
State of West VirginiaFY 2015Summary
General Revenue:Estimated Collections $4,253,951,000(3.6% higher than FY14)
Lottery Funds:Increased bond coverageRevenues remain flat
Required $80 million of base state funding for MedicaidMedicaid funding currently short $76 millionNo layoffs or furloughsGenerally agencies took a 7.5% ATB budget cut (Higher Ed 3.75%)Good cash flow predicted100% of retirement contributions madeBond ratings still hold$100 million usage of Rainy Day fund
14
1997 1998 1999 2000 2001 2002 2003 2004 2005 2%
2006 2007 2008 2009 12%
2010 2011 2012 2013 2014 22.8%
2015 est
20.1%
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
Rainy Day Balance at End of Fiscal Year
15
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 3.500
3.700
3.900
4.100
4.300
4.500
4.700
4.900
5.100
5.300
5.500
3.500
3.700
3.900
4.100
4.300
4.500
4.700
4.900
5.100
5.300
5.500
General & Lottery Funds
Base RevenuesBase Expenditures
Fiscal Year (FY07-FY14 actual)
(FY15-FY19 estimated)
Billion $
16
Six Year Financial PlanThrough FY 2019
General & Lottery Revenues(In Thousands $) (as of 8/1/2014)
Preliminary DRAFT - Subject to Change-
Current Baseline Actual Actual Enacted Projected Projected Projected Projected2013 2014 2015 2016 2017 2018 2019
Estimated RevenueGeneral & Lottery Revenue $4,484,434 $4,337,009 $4,621,245 $4,666,079 $4,920,998 $5,083,858 $5,237,228One time revenues 171,619 307,288 2,300Total Available $4,656,053 $4,644,297 $4,623,545 $4,666,079 $4,920,998 $5,083,858 $5,237,228
Estimated ExpendituresBase Budget $4,520,291 $4,661,121 $4,814,860 $4,979,730 $5,143,438 $5,267,038
Expenditure Growth:Medicaid 426,063 170,725 79,966 35,740 49,355 56,524 46,911Public Education 1,876,166 4,404 (14,641) 2,262 2,323 2,502 2,700Higher Education 512,952 (30,522) (7,370) 500 (3,000) 0 0All Other 1,705,110 (3,777) 95,784 126,368 115,030 64,574 103,950
Total Ongoing Base Budget $4,520,291 $4,661,121 $4,814,860 $4,979,730 $5,143,438 $5,267,038 $5,420,599
One Time Expenditures & Adjustments 135,516 (46,281) (132,656) 6,349 4,560 4,820 4,629
Estimated Balance (Gaps) $246 $29,457 ($58,659) ($320,000) ($227,000) ($188,000) ($188,000)
Note: This six-year financial plan is a tool for analyzing future budgets and any gaps must be balanced.
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