CHARLESTON, W.Va. -- Based on current revenue projections, legislators will need to cut spending by about $80 million in the state budget that begins next July, and that budget gap is projected to grow to $265 million for 2015-16, state Budget Office Director Mike McKown told legislators Monday.
"The way you do that is to cut budgets or to raise taxes, and there's no appetite to raise taxes," McKown told a legislative interim committee.
Until recently, the state's $4.1 billion general revenue budget -- revenue produced from state taxes -- had been growing at a rate of 3 to 4 percent a year, he said.
However, the state economy of late has been flat, primarily because of declining coal sales, he said.
For the first three months of the 2013-14 budget year, tax collections are down 3.4 percent.
"As long as our revenues are flat and our expenses go up, we're getting into structural problems with our budget," McKown said.
Electrical power plants are converting from coal to cheaper, cleaner natural gas, and while the state collects a 5 percent severance tax on each source of energy, statewide coal sales last year were about $8 billion, while natural gas sales totaled only about $2.3 billion, McKown said.
Severance taxes account for about 11 percent of the state's general revenue budget, he said.
Also, natural gas production is much less labor-intensive, McKown said, pointing out that consumer sales taxes and personal income taxes combined account for 72 percent of the state budget.
"Coal miners make a lot of money, pay a lot of income taxes, and buy a lot of things," he said, outlining the impact of declining coal employment on the budget.