Budget Surplus Story Archives - West Virginia Public Broadcasting

State Budget Revenue Healthy, Officials Unsure About Tax Cut Trigger

State revenue is solid for the year, and over estimates, but down from last year because of personal income tax reductions and severance taxes.

West Virginia tax collections are higher than estimated, but it is unclear if another personal income tax cut will happen in 2025.

Legislators heard Monday from Mark Muchow, the deputy secretary of the state Department of Revenue, about 2024 budget revenue numbers.

“After nine months, the state has collected more than $4.07 billion. That’s $522.9 million above estimate,” Muchow said. “It’s down from last year by 11.6 percent, which is pretty good considering that we cut the income tax by 21.25 percent and some reductions occurred in the severance tax as well.”

Muchow said personal income tax collections are $184.1 million above estimate for the year. He explained that it is down 9.4 percent year to date over last year.

“Again, 9.4 percent is pretty good considering that we cut the tax rates by 21.25 and the income tax as a whole was over 40 percent of general revenue fund collections,” Muchow said.

Severance taxes on coal, gas and oil were budgeted for just $22.1 million for this fiscal year to date. So far, the state has collected $48.129 million. That sounds promising, except the previous fiscal year brought in nearly $85 million at this point in 2023 and is off more than 43 percent.

Since taking office, Gov. Jim Justice has maintained relatively flat budgets and kept budget estimates low as well. That has guaranteed annual budget surpluses. Over the last few years, they have topped $1 billion each fiscal year.

Last year, when the West Virginia Legislature passed the personal income tax cut, the bill included triggers that would further reduce those taxes. The triggers are tied to budget surpluses.

Del. Larry Rowe, D-Kanawha, asked about the trigger mechanism during Monday’s meeting.

“Are you able to project whether the August trigger is going to come into play or not?” he said.

“It’s too early for us to do that type of projection. There’s a lot of revenues outstanding. I do believe that the income tax is going to trend lower over the final, at least over the April, May period, [it] may bounce back in June,” Muchow said. “But there’s too many variables out there to make a good, firm analysis on the trigger.”

“When do you think you’ll comfortably be able to make that calculation?” Rowe asked.

“We will not have a complete idea till the end of June,” Muchow said. “But we’ll have a better idea for the end of April. And even better at the end of May. So by the end of May, things will be a little bit better in focus than they are today.”

“So if we were to have a special session in May, and that has been discussed, then you may have the numbers you need to calculate whether the August trigger will come into play?” Rowe asked.

“We’ll have a better idea, but not a perfect idea,” Muchow said. “Again, there’s a number of variables outstanding that we’d have to consider in that equation.”

The Legislature is expected to return to Charleston for a special session on the budget in mid-May following the election but before the end of the month.

Justice Proposes $50 Million Budget For Affordable Housing

Announced Thursday, Justice’s proposal would provide $50 million of state surplus funds for the construction of single and multi-unit houses across West Virginia.

A budget proposal from Gov. Jim Justice aims to ensure that workers and their families can find affordable housing.

Announced Thursday, Justice’s proposal would provide $50 million of state surplus funds for the construction of single and multi-unit houses across West Virginia.

“We’re constantly wanting people to come to West Virginia,” Justice said.

By expanding affordable housing options, Justice hopes to make moving to the state easier. “We need to devote ourselves to trying to stimulate and bring more and more and more folks,” he said.

Rising rental costs and persistent economic depression has placed stress on housing markets across West Virginia. In recent years, millions of dollars in federal funding has aimed to improve the state’s affordable housing options.

Erica Boggess, executive director of the West Virginia Housing Development Fund, said Thursday that the added funding would mark an important step toward bolstering housing accessibility in the state.

“We’re very pleased and excited that the governor has proposed this funding to help with this important initiative,” she said.

With additional funding from the state, housing officials are hopeful for more accessible options ahead. “Housing is truly a component of economic development, and it’s the foundation that makes our communities thrive,” Boggess said.

Improving West Virginia Corrections, Conserving Salamanders And Accessing Dental Care, This West Virginia Week

This week on West Virginia Week we learn about improvements being made to the state’s correctional facilities. Also we learn about the issues of protecting endangered Appalachian salamanders.

We’ll also hear about barriers to dental care for West Virginians with disabilities.

And join us for a look at a century old glassblowing operation in the state.

Chris Schulz is our host this week. Our theme music is by Matt Jackfert.

West Virginia Week is a web-only podcast that explores the week’s biggest news in the Mountain State. It’s produced with help from Bill Lynch, Briana Heaney, Caroline MacGregor, Chris Schulz, Curtis Tate, Emily Rice, Eric Douglas, Liz McCormick, and Randy Yohe. Learn more about West Virginia Week.

Justice Announces New State Budget Surplus Amid State Program Funding Questions

Gov. Jim Justice announced Wednesday that for the first half of Fiscal Year 2024, the state’s general revenue collections stand at $406.4 million ahead of the cumulative estimate.

Gov. Jim Justice announced Wednesday that for the first half of Fiscal Year 2024, the state’s general revenue collections of more than $2.766 billion stand at $406.4 million ahead of the cumulative estimate.

In a related press release, Justice said December 2023 surplus collections came in at $553.2 million, which is $120.1 million above the official estimate. He said the surplus was driven by a strong performance from personal income taxes and corporate net income taxes.

Justice said the surplus numbers are even more prominent when figuring in a 21.25 quarter percent personal income tax cut.

“That is with an amazing, amazing, largest in the state history, tax cut that we delivered to all of our people,” Justice said. “Well in excess of $750 million on top of this.”

Independent state budget analysts have said surplus numbers are partially driven by maintaining “flat” budgets, by setting monthly revenue collection estimates artificially low and by underfunding various state agencies and programs.

During the briefing, Justice was asked about finding a permanent funding source for volunteer fire departments (VFDs) and using state funds to reduce jail and prison overcrowding. In both cases, he said there was surplus money to help but gave no specific answers on how that help will come.

“That’s what we build our surpluses for,” Justice said about funding VFDs. “With all interest, we’re gonna find it and we’re gonna get it done.”

W.Va. Budget Surplus Spending Destinations Defined

In a Wednesday media briefing, Gov. Jim Justice and Revenue Secretary Dave Hardy defined, and added to, earlier released details on how the state will spend some of its more than $1.8 billion budget surplus.

Hardy said a little over $1.1 billion is designated as surplus section spending. He said that covers 32 different 2023 budget items passed by the legislature and signed by the governor.

He said $40 million goes to the School Building Authority to cover the inflationary rise of school building costs, and $125 million toward the construction of a new consolidated state laboratory.

“Our state laboratories are deficient,” Hardy said. “Our state police, our health department and our agricultural secretary have all stated that our laboratories are ancient and obsolete.”

Hardy made note that another $282 million is set aside for deferred maintenance for state colleges, universities and correctional facilities.

“This is taking the benefit of the surplus and applying it to deferred maintenance, that’s gone on sometimes 20 or 30 years that it’s been neglected,” he said.

Hardy said $400 million goes to the personal income tax reserve fund, to pay income tax refunds as they come due. Other items include a one-time $50 million payment to the West Virginia University Cancer Institute and $29 million to the West Virginia School of Osteopathic Medicine in Lewisburg.

“The surplus section has become the way that we take the benefit of holding down our expenses, holding down our base budget, waiting till the fiscal year is over and then allocating dollars toward unmet needs,” Hardy said.

Find a more detailed listing of Fiscal Year 2023 surplus section spending here.

W.Va. Sets Record With Fiscal Year-End Surplus, Results Questioned

The release noted that at the close of the fiscal year, June 30, 2023, at midnight, total collections for the revenue year will come in at approximately $6.5 billion – 10 percent ahead of prior year adjusted collections – marking the first time in state history that final collections for a single year have exceeded $6 billion.

Gov. Jim Justice announced on Friday that West Virginia’s cumulative revenue collections for Fiscal Year 2023 will come in at $1.8 billion over estimate. He said the budget surplus breaks the record for biggest single-year revenue surplus in state history for the second year in a row.

“I’m going to work with the Legislature to take what’s left unappropriated and continue to make wise investments in what we know will bring us more goodness,” Justice said in a press release. “Things like infrastructure, federal matches, and tourism, because the more we tell the world about West Virginia, the more people will want to live, work, and raise their families here.”

Looking at the fiscal 2023 year end numbers, Kelly Allen, the Executive Director of the West Virginia Center on Budget and Policy, called this a manufactured surplus. She said because Justice set revenue estimates artificially low, that essentially capped the size of the budget and left state financial and employment crisis situations unresolved.

“Legislators have to pass a balanced budget,” Allen said. “They have to stick with that top line number that the governor gave them when they passed the budget that had to stay at $4.8 billion, even though we knew more like $6 billion was going to come in. And we’re seeing the results of that with the budget crisis at WVU, with vacancies at our correctional facilities with other crises that are going on. We think of that surplus as a missed opportunity of taxpayer dollars that aren’t getting to where they’re supposed to go, because agencies and other organizations that depend on state dollars haven’t been able to build those into their budgets.”

In an income breakdown, the release noted:

Severance Tax collections set a record of nearly $950 million, a 24% increase from the prior year, with taxes from natural gas accounting for roughly 60% of total collections.
Corporation Net Income Tax collections grew at 14% and totaled $420 million, eclipsing a record set 15 years ago in 2008.
Personal Income Tax collections set a new record of $2.66 billion, despite a rate reduction of 21.25% that kicked in after the West Virginia Legislature passed and Gov. Justice signed HB 2526, the largest tax cut in State history.
Consumer Sales Tax reached an all-time record of $1.75 billion, growing by about 5.7% from last year, and Interest Income Tax Collections reached an all-time record of more than $132.4 million.

Allen said those record collections are skewed because responsible budgeting requires accounting for inflation’s impact on the budget.

“With inflation, the cost of everything goes up,” Allen said. “Things that the state pays for goes up – salaries for state workers, the cost of health insurance and medical costs, utilities. The costs go up every year a little bit just like they do for households. And by holding the budget flat, that means that the agencies and public organizations that rely on state dollars are able to do less and less with the same amount of money because the dollar just doesn’t go as far. It’s a problem for maintaining services, as we’re seeing in these crises and different sectors all over the state. But it also means that taxes that are being paid by all of us aren’t aren’t getting to the public services that we intended for them to pay for.”

The Justice press release added that, by law, a percentage of the year-end surplus must be transferred to the state’s rainy day fund, this year that amount is approximately $231 million. This leaves approximately $454 million unappropriated. June 2023 total collections are expected to come in at approximately $580 million.