In his budget proposal for the new fiscal year, which begins July 1, Tomblin wants state agencies to cut their spending by more than $75 million combined.

Nearly half of those proposed budget cuts would come from higher education funding. That could result in greater increases in college tuitions costs, according to the analysis.

West Virginia spends a higher percentage of its state budget on education than most states because it is a "low-income state with large unfunded liabilities, expensive transportation needs and aging schools."

The only source of major growth in state revenues over the next five years, according to the analysis, appears to be from personal income taxes.

State Lottery revenues are predicted to decline, as well as severance, business and occupation, tobacco and corporate net income taxes.

The new analysis, written by Sean O'Leary and Ted Boettner, concludes that to protect the state's long-term financial health, "lawmakers will need to raise revenue and control costs in Medicaid and the state's correction system."

Cuts in higher education funding will reduce funding by $10.4 million to West Virginia University, $4.9 million to Marshall University and millions more to the state's technical and community colleges, according to the analysis.

"If this trend continues," O'Leary and Boettner write, "college will become even less affordable in West Virginia, a state that is already struggling with a lack of education in its workforce."

Exceptions to the proposed cuts include a $108 million increase to the Division of Corrections and a $10 million increase to the West Virginia State Police.

The Division of Human Services will also receive a $10.4 million increase for its Child Care Development program, which helps low-income working parents pay for child care while they work at their jobs.

Spending increases for state prisons and jails have far outpaced increases in almost every other area of the state budget.

Between fiscal year 2005 and fiscal year 2014, spending on the state's prisons grew by 58 percent -- nearly triple the 21 percent increase for all general revenue expenditures in West Virginia.

"The rise in corrections spending," O'Leary and Boettner point out, "is fueled by a growing prisoner population, which has created massive overcrowding in state prisons.

"This has led lawmakers to put prison reform as a major topic in the year's legislative session."

Some legislators have recommended the possible release of some prisoners incarcerated for nonviolent crimes.

Medicaid, the state budget's largest program, could generate additional major financial problems for the state. Today, West Virginia's Medicaid budget is $3.1 billion.

The entire state budget is $11.3 billion, including $7.2 billion from state resources and $4.1 billion from federal resources.

As the state's per capita income has grown in recent years, the federal government's share of Medicaid funds fell from 74 percent to 71 percent of the program's total costs, resulting in more state funds being spent on it.

As other funding sources for Medicaid decline, more General Revenue Fund revenues will be needed to help finance the program, straining the state's budget.

"Our current structure for funding Medicaid is quickly becoming a problem," the analysis warns.

Tomblin is making some recommendations to help increase state revenues, including the "Amazon Law."

That proposed law would generate about $10 million a year by assessing the same 6 percent state sales tax on goods that residents order online from out-of-state companies such as Amazon. O'Leary and Boettner favor Tomblin's proposal.

West Virginians now avoid paying that online 6 percent sales tax, which is assessed on locally sold products.

Mineral severance taxes, which currently provide 10 percent of the state budget's basic revenue, might also decline.

In 2004, severance taxes made up just 5 percent of the state's basic budget. But increases in coal prices and rising production of natural gas from Marcellus Shale deposits have increased those tax revenues in recent years.

But analysts predict severance taxes will make up only 8 percent of the state's base budget by 2018.

In 2012, the Mountain State had $912.9 million in its Rainy Day budget stabilization funds, one of the best-funded "Rainy Day" funds in the country. The state is not planning to use those funds to help fill the gaps between next year's projected income and budget expenses.

The Center on Budget & Policy analysis recommends that "lawmakers consider both sides of the budget -- expenditures and revenue -- when adopting this year's budget.

"The state needs to take a balanced approach by controlling costs in Medicaid and the state corrections system while at the same time securing enough revenue to ensure the long-term fiscal health of the state."

Reach Paul J. Nyden at pjny...@wvgazette.com or 304-3348-5164.