W.Va. Pares $201M From Spending, Credits Adviser

Fri January 30, 2009 - Northeast Edition
Lawrence Messina



CHARLESTON, W.Va. (AP) It may seem simple enough: tinker with the salt spreaders on state Division of Highways trucks whenever they hit the road, to make sure each sprays out just the right amount.

But adding that step to the wintertime routine has saved West Virginia $4.5 million over the past two years. It’s among more than 30 ways the state has cut costs with the help of Public Works LLC, the consulting firm hired by Gov. Joe Manchin during his first term.

Public Works released a report in 2006 suggesting savings of $318 million in five years, by closely examining the way the state and its numerous agencies and programs did business.

State officials estimated that 32 steps identified by that study cut state spending or otherwise saved West Virginia $201.7 million in the past two years.

“It’s working,’’ said Jim Pitrolo, Manchin’s legislative director. “It’s on track to save the money that we thought it would.’’

Some of the amount reflects one-time savings. But the bigger steps could pare down annual spending by an estimated $92 million in each of the next few years.

Such breathing space comes at a crucial time. After several years in which revenues exceeded projections, Manchin budget officials earlier predicted that spending will outpace revenue starting in the fiscal year that begins July 1.

West Virginia’s constitution forbids deficit spending. The most recent estimate forecasted a $13.5 million funding gap for the $4.4 billion general revenue budget expected during the 2009 to 2010 fiscal year.

That estimate assumed there would be no general revenue or lottery surplus this year; legislative leaders believe there will be enough excess revenue from the last two budget years to close the projected hole. But the latest estimate predicted gradually increasing deficits in subsequent years, with the largest gap at $143.2 million for 2012 to 2013.

The largest chunk of the savings so far, about $120 million of the two-year total, came after Highways reduced its reliance on outside consultants for road projects.

Ronald Moats, Manchin’s senior project manager, noted that the step is separate from ongoing efforts to redistribute the staff of that division’s 10 districts. That effort, and the sale by auction of equipment deemed unneeded, has fueled fears among road workers that the governor aims to privatize their jobs. No such plans exist, Manchin officials have said.

The Public Works roster of savings also includes $52.5 million related to the state’s Medicaid program. Pitrolo and Moats said about $31 million of that came after the health care program began requiring prior authorization for certain medical services. The rest reflects a crackdown on fraud by both recipients and providers.

The state also has trimmed $3 million from agency budgets by having them remove chronically vacant job positions deemed unnecessary, and $5 million by eliminating special fund accounts within the Department of Transportation that had drawn down general revenue for projects already completed.

Not all the ideas proposed by Public Works panned out: Pitrolo noted that the original list included more than 40 recommendations.

The Manchin administration also is pursuing the next phase of its contract with the consulting firm. It involves more sweeping steps that may yield long-term savings instead of immediate ones.

It includes the ongoing revamping of the General Services Division, which oversees the Capitol Complex and other state-owned buildings. The state has recently poured millions into reversing years of neglect in the historic Capitol and the campus’ centralized heating and cooling system. The overall goal is a long-term maintenance plan that should prove a less costly alternative.

Public Works also has advised West Virginia to launch a multi-agency crackdown on unlicensed and undocumented workers at private job sites. Pitrolo said that when state labor inspectors previously cited those employers, they rarely or never alerted their tax or unemployment compensation counterparts. Coordinating across agencies should help make sure that employers are paying what they owe, he said.

The Legislature helped Manchin complete another step from the second phase, by creating a Real Estate Division to handle all office and property purchases, sales and leases. Pitrolo did not believe that any pending proposals from Public Works would require legislation during the upcoming regular session.