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W.Va. ends budget year with $300 million more than expected

July 04, 2006|by DAVE McMILLION

CHARLES TOWN, W.VA.

Thanks to trends like increased business growth in the Eastern Panhandle, West Virginia ended its budget year with about $300 million more in general revenue than expected, its strongest showing since at least the 1970s, state officials said Monday.

The revenue is in addition to the $3.5 billion the state expected to collect in taxes and fees during the fiscal year that ended Friday.

Much of the money will benefit state retirement programs, including one for teachers that is perhaps the worst-funded public pension plan in the country. With this latest aid, Gov. Joe Manchin and lawmakers will have poured an extra $900 million into those ailing programs since 2005.

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Thanks to this huge boost, Manchin said that devoting an additional $400 million toward the pension plans would drastically decrease future payments the state must make toward unfunded liabilities.

Del. Bob Tabb, D-Jefferson, said it is important to pay down on retirement programs because it allows the state to get better interest rates on bonds for projects in the state.

Having a surplus like the current one frees up funds to allow for more infrastructure improvements in rapidly growing areas like the Eastern Panhandle, said Sen. John Unger, D-Berkeley.

State budget officials associate the growth with a wave of economic activity in the business sector, Manchin said. Construction employment is up and local lawmakers say business growth in the Eastern Panhandle has helped contribute to the brighter economic picture.

Unger said 8,100 new jobs were created in the state last year and companies that specialize in homeland security efforts have found the state an attractive place in which to do business because they can move out of the Washington, D.C., area but be close enough to serve that area.

Manchin plans to convene a special legislative session, perhaps in November, to revisit the state's tax system. The goal is to generate revenue that keeps pace with such rising costs as Medicaid, while embracing the administration's "Open for Business" motto.

"We are going to look at everything," Manchin said. "If we can be more competitive in certain arenas, then we should look at that."

Manchin later singled out the business franchise tax, which takes seven-tenths of a percent from annual net equity. When combined with the corporate net income tax, it accounts for about 8 percent of general revenue.

The Legislature passed a $3.6 billion general revenue budget for the fiscal year that began Saturday.

The Associated Press contributed to this story.

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