CHARLESTON, W.Va. -- West Virginia should finish the 2012-13 fiscal year in the black at the end of June -- after emptying a $45 million reserve fund, and imposing $28 million in spending cuts, the state's deputy revenue secretary said Monday.
Mark Muchow said the state should wrap up the fiscal year June 30 with a cushion of about $7 million, after raiding the reserve fund and making the mid-year spending cuts in state agency budgets.
"We fully used the $45 million in the Income Tax Reserve Fund," Muchow said.
Set up in the early 1990s to help assure quick payments of state income tax refunds, the fund had gone largely untouched, thanks to strong economies in recent years. In fact, as recently as February, state Auditor Glen Gainer argued the fund was no longer necessary, since the state does not have cash-flow problems as it had in the 1980s.
"Over the past five years, we used part of it, and quickly paid it back," Muchow said of the reserve fund. "This time around, I don't think we're paying it back anytime soon."
The state used $18.4 million out of the fund to pay refunds in April, and spent the remaining $26.4 million in May, he said.
Muchow said having an Income Tax Reserve Fund makes sense, given the boom-and-bust cycles in the state economy.
"When you're a natural resource-producing economy, you can have several years in a row of good times, and then years of not-so-good times," he said.
Also helping the bottom line was legislation enacted in April cutting $28 million of spending out of the 2012-13 budget.