CHARLESTON — West Virginia’s Rainy Day Fund, meant to help the state weather emergencies and severe drops on state tax revenue, ended the fiscal year in June with the most funding in the last 11 years, coming in at almost $1 billion.
According to the West Virginia Budget Office and the Governor’s Office, the Rainy Day Fund came in at $995.1 million as of June 30, marking the end of the 2021 fiscal year.
“The Rainy Day Fund — being topped where it is right now – is in phenomenal shape,” Gov. Jim Justice said last week. “We’re right in the sweet spot.”
The $995.1 million in the fund is the most the fund has in 11 years according to data on the Budget Office’s website. It’s also the most money in the fund since June 30, 2014, when the fund had $955.9 million.
The Rainy Day fund is also known as the revenue shortfall reserve fund. The West Virginia Legislature created the fund in 1994 to allow the governor to pull money from the fund to offset shrinking tax revenue or to cover the state’s bills in the short term. The fund is divided into part A and part B, with funds from part B only being used when funds in part A run out.
The fund was tapped several times in the last decade to deal with declining tax revenue due to lower severance tax collections from coal. Gov. Earl Ray Tomblin transferred $100 million from the fund in fiscal year 2015 and $98.6 million in fiscal year 2016. During fiscal year 2017 – as Tomblin was leaving and Justice was taking office — $31.7 million was used to balance the budget as required by law.
According to the non-partisan Tax Foundation, West Virginia ranked fifth for the health of its Rainy Day Fund. According to the Pew Charitable Trusts, West Virginia was one of 35 states that did not tap their rainy day funds to cover tax revenue shortfalls caused by business shutdowns at the beginning of the COVID-19 pandemic.
State code requires that half of any surplus at the end of a fiscal year (up to 13 percent of the total appropriations from the general revenue funds) be transferred to the Rainy Day Fund, which can be used to offset any projected revenue shortfall in the future, paying unfunded retirement and benefit liabilities, or used for other expenditures.
The state ended the 2021 fiscal year with $4.988 billion in tax collections for the general revenue budget and would have ended the fiscal year with a $413 million surplus, which would have put the Rainy Day Fund at $1.146 billion. But two special sessions in June saw lawmakers appropriate $150 million of surplus tax collections to the Division of Highways and nearly $250 million to various state agencies at the request of Justice.
After the Department of Revenue amended fiscal year 2021 revenue estimates twice in June to reflect the approximately $400 million in surplus supplemental appropriations, the state ended the fiscal year with $5.6 million, half of which went into the Rainy Day Fund. Of the nearly $250 million surplus spend during the June 24 special session, $50 million also went into the Rainy Day Fund to get it close to $1 billion.
During the special session, Justice Chief of Staff Brian Abraham proposed the idea of changing state code to allow the state to keep more of end-of-year surplus dollars once the Rainy Day Fund hits $1 billion. Justice said he supported that idea.
“It’s up to the Legislature to consider and I think they should do so from the standpoint of having to put half of the money in there,” Justice said. “We need them to think about that and consider that.”
West Virginia’s Rainy Day Fund plays a role in the ratings the state receives from major lenders, such as Moody’s, S and P, and Fitch. The state’s bond ratings range from AAA for highest quality, to A for strong.
“From the standpoint of the rating agencies, they’re tickled to death,” Justice said. “We’re right where we need to be, in the 17 percent to 23 percent of general revenue that’s in rainy day funds … we continue to consult with our financial people and our financial advisors.”
State code also allows the governor, by executive order, to borrow from the Rainy Day Fund between the start of the new fiscal year and Oct. 31 to pay the state’s bills until tax revenue for the new fiscal year comes in. The funds must be repaid within 90 days. According to the Governor’s Office, $68 million was borrowed from the Rainy Day Fund at the start of fiscal year 2022 on July 1.
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July 10, 2021 at 11:04AM
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Rainy Day Fund ends fiscal year at almost $1 billion - The Inter-Mountain
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