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West Virginia budget deficit could grow to $700 million in next 18 months

Gov. Jim Justice said West Virginia's government is looking at a projected budget deficit of $500 million in the next fiscal year, and the funding gap would increase again the following year to $700 million.

The Tomblin administration, which estimated a $400 million shortfall for the year starting July 1, proposed raising the state's consumer sales tax 1 percent. Gov. Earl Ray Tomblin in November ordered a 2 percent half-year spending cut under this year's $4.1 billion budget.

Justice will issue his own plan when the Legislature convenes Feb. 8. Justice told the Beckley Register-Herald He said that across-the-board cuts won't solve the budget problem though there are some state agencies that are wasteful that he wants to cut, including education, which he wants returned to local control.

Addressing the Beckley-Raleigh County Chamber of Commerce on Wednesday, Justice said the state is in poor economic shape despite a few bright spots.

"First and foremost, the depression is beyond belief," Justice told the gathering. "That's where we are, like it or not."

"There are opportunities in agriculture, opportunities in tourism," he said. "All of these will take a while."

He has proposed tiers for taxing coal and natural gas production, instead of flat 5 percent, that would rise and fall along with market prices. Justice, who owns several coal mines in West Virginia and other states, said Wednesday that he's against simply lowering the tax to 2 percent, which some have suggested. With tiers the tax could go up to 10 percent if the price rises to $200 a ton, he said.

"Here is the deal. What I'm going to say is if it's $35 a ton, we as a state realize you're hurting," he said. "As coal goes to $55 a ton where you're making money, I want it to be at 5 percent. These are hypothetical prices and this is steam coal. I would like to get 6.5 percent."

"The coal operators have lost so much money. That's bad for people, bad for companies, bad for stockholders. There have been bankruptcies declared. It's catastrophic," Justice said. "But if you look to the future to a good day, a day when we hope coal is selling for $150 to $200 a ton, it gets to those levels, instead of 5 percent, you pay 10 percent and at that level, you're bringing the state hundreds and hundreds of millions of dollars."

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