The State Budget Process
West Virginia's political system cannot be understood without taking into account the state's budget process. All political decisions center around the budget. It determines precisely how state funds can be spent and, to a large extent, which policies can be pursued throughout the fiscal year.
The budget process is a battle about the scope and direction of public policy. The battle is both intensified and constrained by the scarcity of resources. As noted in chapter 5, the state constitution places constraints on state property taxation and deficit spending. Additionally, the out-migration of many productive citizens and the loss of high-paying mining jobs during the 1970s and 1980s created a fiscal crisis as state revenue could not keep pace with budgetary demands and inflation. In 1988, faced with the prospect of eliminating government services or raising taxes, the state raised the sales tax from 5 to 6 percent, extended it to all sales and nonprofessional service transactions, and eliminated all itemized deductions in the state's personal income tax. The tax increases resolved the state's cash flow problem and also moved its "tax effort" from forty-third to eighth among the states.1 The size of the increase and the rise of anti-taxation sentiment since then has precluded any further efforts to raise taxes. Coupled with little change in federal assistance, the central strategy for all participants in the budgeting process has become the defense of previous allocations and a desperate search for a few extra dollars to meet new demands and to account for inflation.
A little over one-third of the state's $6.2 billion in revenue in 1996 ($2.2 billion) came from the state's general fund (collected from twenty-four reve-