By Amanda Iacone Associated Press
CHARLESTON — Gov. Earl Ray Tomblin’s proposal to provide millions of dollars for road and sewer improvements is now in the hands of lawmakers.
Tomblin proposed the infrastructure reserve fund during his state of the state address last week as a way to pay for road improvements without raising taxes. On Monday, the West Virginia House of Delegates introduced the measure, which would also siphon a portion of the state’s rainy day fund to cover growing Medicaid expenses.
The governor wants to use half of any unspent tax revenue for road and bridge projects. Part of the funding would also be available as grants for cities and counties looking to extend or upgrade water and sewer utilities.
Based on last year’s surplus, $165 million would have flown into an infrastructure reserve fund.
But the money couldn’t be spent unless West Virginia’s emergency reserve fund equals 15 percent of general fund revenues. Currently the rate is capped at 13 percent. And some lawmakers question whether the state’s cash reserves are too big and should be spent, not increased.
“It’s sort of like when you’re not paying your bills but you’ve got all your money stuffed under the mattress. That’s the analogy. We need to use our resources in a better way than socking it away in a rainy day fund. It’s raining in West Virginia. We need to use it,” said Delegate Mitch Carmichael, R-Jackson.
Some lawmakers argue that a large cash reserve bolsters the state’s credit rating, allowing the state to borrow money at cheaper interest rates. But the governor’s plan to increase the reserves would ensure the state has the cash on hand to pay for much-needed road and bridge projects instead of borrowing money, said Delegate Harry Keith White, D-Mingo.
“I’m not for putting the state in debt,” White said.
But he said it could take several years to generate enough revenue to both hit the 15 percent target and divert any surplus revenue to infrastructure projects. Building a chemical plant related to the Marcellus shale industry, often called a “cracker” plant, would increase tax revenue substantially allowing the state to meet both goals laid out in the bill, White said.
The state gas tax and other motor vehicle fees have not kept pace with the cost to build and repair roads. And lawmakers have been reluctant to pay for transportation projects using general fund revenue that supports other core services like education and public safety.
The governor’s plan would repair the state’s highways without raising taxes and would provide modern sewer and water services that are key to spurring economic growth, said Tomblin spokeswoman Kimberly Osborne.
“The governor is very focused on economic development and growth. These are the pillars that support economic growth,” Osborne said.
The bill would also use the interest earned from part of the state’s cash reserves to pay for Medicaid services, which are expected to cost about $3 billion this year.
Medicaid represents a significant portion of the state’s budget and the governor wants to use rainy day fund interest to cover those growing costs in future budgets, Osborne said.
The state keeps its $1.1 billion worth of savings in two separate accounts and the governor would tap the smaller $313 million rainy day fund for Medicaid.
The fund generated $36 million in interest last year but is down about $3 million so far this year, said state budget director Mike McKown.
West Virginia already has a small Medicaid reserve fund but McKown expects the remaining $181 million to be spent by next January, he said.
The federally-supported health care program has doubled in cost since 2000. State officials expect that adding as many as 100,000 more participants in 2014 through the federal health care reform law will only add to the costs.