In the five months of the current fiscal year so far, the state brought in approximately $130 million in revenue more than budgeted, but it may not be as good as it seems.
Eric Nelson, the secretary for the West Virginia Department of Revenue, told the Joint Finance Committee of the legislature Sunday that the two primary drivers of the revenue increase are personal income tax and consumer sales tax. Those also happen to be the largest line items for revenue.
“One thing that is affecting our personal income tax being above estimates, we had a car rebate and we budgeted for $200 million through November,” he said. “Only $140 million have basically come back into the system. So that extra $60 million that was budgeted and has not been claimed is part of why your personal income tax is above estimates.”
Another driver for revenue for the state is severance taxes, but they can be volatile. Natural gas prices are up and so is thermal coal, but metallurgical coal is soft.
“The severance tax came in below estimate by $20.8 million. That’s after October where taxes were above estimate,” according to Mark Muchow, deputy secretary for the West Virginia Department of Revenue. “The important thing on severance tax, rather than being below estimate by $20.8 is looking at the year to date growth, or I should say, the growth of revenue in November, which was $8.2 million, or 43.5%.”
He said severance tax is trending higher than it was last year.
Taxes for tobacco products were $1.3 million compared to last year.
“We were down by 12.4% and that’s largely reflective of an ongoing trend, not just in West Virginia, but across the country, of consumption habits changing away from cigarettes, traditional cigarette products, to other types of products, such as vape products,” Muchow said.
