West Virginia's Republican-controlled legislature concluded this year's 60-day regular session on Saturday without passing a balanced budget. Democratic Gov.Earl Ray Tomblin indicated he would likely have to call lawmakers back for a special session to resolve the impasse. The state's general revenue budget has grown rapidly over the last decade, and lawmakers are gridlocked over how to balance the $4.3 billion budget and plug a nearly $400 million deficit. The state Senate shelved a House-crafted budget over the weekend that would have relied on $72 million in spending cuts for state agencies, while the House has rejected a Senate proposal that would raise $139 million in tax increases on tobacco products, among other things. The state has long relied on its coal and natural gas severance taxes to balance its budget, but the commodities downturn is now straining its finances. Overall severance tax collections rose by 2% through the first nine months of fiscal year (FY) 2015 but fell 31% through the final three months, reflecting coal's ongoing downturn and a drop in oil and gas prices. The state has projected that FY 2016 severance tax collections could fall nearly $192 million short of projections (see Shale Daily, Oct. 7, 2015). The House last week shelved a bill passed by the Senate that would have lowered the coal and gas severance taxes (see Shale Daily, March 8).
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