“Habit, if not resisted, soon becomes necessity.”
Of course, no other than a saint said that.
If you doubt the truth in that wisdom, look no further than how our state balances budgets.
A little more than three years ago Gov. Earl Ray Tomblin proposed dipping into the state’s Rainy Day Fund to stabilize the 2014-’15 Fiscal Year budget.
But then, even before the 2013-’14 budget year was over, West Virginia needed to tap those reserves to cover a revenue shortfall.
At that time, the Rainy Day was flush with nearly $1 billion in reserves.
Still, just days after Tomblin’s Jan. 8, 2014, State of the State Address, when he first proposed tapping that fund, we wrote:
“Despite the state’s Rainy Day Fund being ranked third best in the nation — flexing $920 million of fiscal muscle — what’s to stop such draw downs from becoming a habit?”
Today, that fund is sitting at about $682 million.
Last week, Gov. Jim Justice proposed tapping it for the fourth straight year to balance the current fiscal year’s budget’s shortfall.
Last week, in his State of the State Address Justice proposed withdrawing another $123 million from it to fill the latest hole.
Whether you agree with using this fund to balance the state budget is beside the point, for it looks to be fiscal policy, now
No, state governments are not in business to make money, though only six years ago West Virginia boasted a $160 million surplus, one of a string of such surpluses.
And it’s never simple to budget for anything based on severance revenues deriving from volatile energy markets during a statewide recession.
We opposed tapping the Rainy Day Fund from the outset for budgeting in 2014 because it was then a case of dedicating one-time money to cover pay raises.
However, since then it’s used as a last resort to backfill funding gaps at the end of budget years.
Still, continuing to drain off your emergency reserves is not a good strategy.
The Rainy Day Fund is basically a fixed pool of money, not an ongoing revenue source, and once spent, it’s gone.
Not to mention the state’s bond ratings, which affect borrowing power, are predicated on this fund’s strength.
The Justice administration claims it will not be going to the Rainy Day Fund beyond this year.
Mindful as that sounds, we suspect the $123 million draw down for this fiscal year will not be enough.
State revenue figures for January were already $116 million off projections.
It’s said the only way to break a bad habit is to drop it.
If our state doesn’t drop this habit it could go broke.