Justice signs budget bill, state employee pay increase, PEIA bill

The state budget, a pay raise for government employees and a fix for the Public Employees Insurance Agency were among four bills signed into law Friday by West Virginia Gov. Jim Justice.

The budget presented in House Bill 2024 totals $4.874 billion and includes 34 surplus appropriations, Justice said.

Highlights include $67 million for tourism, $40 million for the state School Building Authority, $10 million for emergency medical services recruitment, $50 million for a new cancer center at West Virginia University, and $282 million for deferred maintenance in the state's jails and prisons, he said.

"It's basically, again, a flat budget," Justice said. "And that's good. And what that should tell you is we have really looked after the store."

The budget also includes $20 million for the Nursing Workforce Expansion Program and $125 million for a new consolidated state labratory, as well as $5 million for the Communities in Schools Program and $10 million for the newly created Posey Perry Emergency Foodbank Fund, named after Justice's uncle.

"In all honesty, after he retired from working in the coal mines his whole life ... he spent day after day ... in a food bank, working in a food bank. He did it religiously," Justice said of his uncle.

The budget bill also sets aside $400 million in a Personal Income Tax Reserve Fund to offset a personal income tax reduction, "just in case we get upside down and get in a bunch of trouble," Justice said.

"I don't think we'll ever touch it," Justice said. "In fact, I really don't see the need at that level that we went in on, because we went in at a lesser level. But, nevertheless, it's there."

West Virginia Center on Budget & Policy Executive Director Kelly Allen expressed concern Friday that the flat budget fails to address many ongoing problems, while bolstering a tax reduction that would see the state's wealthiest citizens receiving the largest returns. The Center on Budget & Policy is an independent, nonpartisan research organization with the goal of supporting informed public dialogue and policy in West Virginia.

"The general revenue budget signed today is more than $500 million less than 2019's, after adjusting for inflation," Allen said. "This session's prioritization of income tax cuts meant many budget needs had to go unaddressed — leaving no room to increase funding for higher education and PEIA to offset rising costs, or to address crisis-level correctional vacancies and child care affordability."

Allen added, "While most families will see meager benefits from the tax cut package, all will feel the impact of less investment in education, PEIA and infrastructure."

The concern over PEIA grew when, prior to the legislative session, Wheeling Hospital issued a statement saying it would no longer accept PEIA due to low reimbursement rates, sparking worry among lawmakers that other providers could follow suit.

In addition, the agency hasn't seen a premium increase in years (despite the 80/20 ratio being set in statute) and faces a $376 million shortfall, according to a five-year outlook released last year.

Senate Bill 268, signed by Justice Friday, returns the employer-employee premium cost share to 80/20 and sets the reimbursement rate for providers at 110% of the Medicaid rate.

"We absolutely now have what ... is as close to a permanent fix for PEIA that we haven't had in the past," Justice said.

Justice said he originally proposed putting $100 million into PEIA to continue holding off a premium increase.

"The Legislature decided nope, they don't want to do that," he said. "They want to take that back out and do something else with it. What they want to do is come up with some methodology to really permanently put PEIA on a pathway to being fixed."

Some, including the unions representing the state's public employees, are concerned that the "fix" will create a hardship for policyholders, who will have to adjust to a rapid and significant premium spike.

Additionally, the spouses of public employees will now have to buy into the coverage plan at an out-of-pocket cost of $147, if they have insurance options through their own employer. There also is concern about a study included in the bill that will look at alternative ways of providing coverage to non-state employees.

SB 423, providing a $2,300 across-the-board pay increase to state employees, is meant to help offset the increased cost to state employees created by the PEIA bill, Justice said.

"It backstops the increase in premiums and everything to PEIA," Justice said. "To me, it's a major step in the right direction."

Justice previously said he would not increase PEIA premiums during his tenure.

"Maybe we could have continued ... with just pulling out some surplus dollars and keep kicking the can down the road, but this doesn't kick the can down the road," Justice said.

Justice said he hopes to push a major pay increase for state employees before he leaves office.

"I hope to goodness, before I'm gone, we'll be able to do at least one more," he said.

The fourth bill Justice signed, HB 3307, establishes the West Virginia-Ireland Trade Commission, to advance trade, investments, academic exchanges and other matters as determined by the commission.

The bill took effect Friday — St. Patrick's Day — and Justice and lawmakers signed it with a green pen.

"This is one step forward to working with Ireland and, of all places, West Virginia," Justice said. "This will allow us to drive more and more business and visitors back and forth between us. This is really, really good stuff."