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.”

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.

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.

Gov. Justice: W.Va. Headed for Strong Fiscal Year Finish

West Virginia tax revenue for the month of April were above estimates, putting the state on track to reach projections by the end of the fiscal year in June, according to Governor Jim Justice.

Justice said during a news conference that revenue collections for April were $23.7 million above estimates.

It was greatly because of personal income taxes and wage and salary withholdings, which are indicators of a strong and vibrant economy and good things going on,” Justice said.

Collections for the current fiscal year now stand at almost $3.4 billion — or 99.9 percent of year-to-date estimates and 4.4 percent above the last fiscal year.

Justice also says bond rating agency Fitch Ratings told officials it recently revised the state’s outlook from “negative” to “stable.”

House to Take Up Funding Bills Monday

Lawmakers continue to move forward with legislation to balance this year’s budget, and three of those bills will be up for a vote in the House of Delegates on Monday.

Senate Bills 342, 357, and 360 are all aimed at balancing the 2016 budget.

Governor Tomblin’s budget officials say the state will end the fiscal year in June with a nearly $400 million budget gap and West Virginia lawmakers are constitutionally required to balance the budget each fiscal year.

House Finance Chairman, Delegate Eric Nelson of Kanawha County says the three Senate bills were introduced on behalf of the governor and complement each other.

“In an overall summary, they’re basically moving expenditures from Medicaid, from the General Revenue line item, over to Lottery,” Nelson explained, “and so the very first bill that’ll be up is expiring $53 million from General Revenue and moving that to Lottery and within that is roughly $9.8 million for title 19 programs, or senior services, and a follow up bill basically requires immediate expenditures out of Lottery for that $9.8 [million] to help fund the title 19 programs in this fiscal year of 2016, then there is another $10 million that’s being expired out of Lottery to fund other Medicaid services leaving roughly 34 million that will be covered in next year’s fiscal year.”

All three bills will be up for a vote on Monday in the chamber. Combined with funding measures being considered in the Senate and actions already taken by the governor, Nelson says the state is in good shape for the current fiscal year, despite a debate lawmakers had on the floor earlier this week.

Democrats are pushing the Republican majority in the House to take on funding shortfalls for PEIA, the state’s public employee health care program, but Nelson says that’s a task for the 2017 budget.

“Our current fiscal, which ends in June, we’re fully covered; the employees, there is no change, and so what we’re looking at into next fiscal year 2017 that begins July 1, the Governor’s proposed $40 some million dollars of new monies that will basically on an 80/20 split, it’ll be a shared premium adjustment for the employer as well as the employee.”

The governor’s new monies Nelson refers to would come from an increase to the state’s tobacco tax- something that has not yet been proposed to the chamber.

West Virginia Revenue Slide Continues as Energy Prices Drop

West Virginia’s budget gap has topped $60 million as low energy prices continue to dampen tax collections.

The West Virginia Department of Revenue says September’s tax collections missed estimates by $55.5 million. That pushed the deficit for the fiscal year’s first three months from $12 million at the end of August to $67.8 million.

The deficit is projected to grow to $250 million by the end of the fiscal year.

Revenue Secretary Bob Kiss attributes the decline to low energy prices that have eroded severance tax collections.

Severance tax collections for the fiscal year’s first three months were more than $43 million below estimates.

On Monday, Gov. Earl Ray Tomblin told most state agencies to cut spending by 4 percent to help close the gap.

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