Personal Income Tax Story Archives - Page 3 of 6 - West Virginia Public Broadcasting

Severance Tax Shortfalls Could Challenge Record Budget Surplus Numbers

Decreases were expected in personal income tax revenues – and in severance taxes relating to a fluctuating coal, gas and oil market.

Breaking down West Virginia’s $1.8 billion surplus from the past fiscal year, while projecting a 2024 budget, Department of Revenue Deputy Secretary Mark Muchow told members of the legislative Joint Committee on Finance that while funding increases were consistent across the board, decreases were expected in personal income tax revenues – and in severance taxes relating to a fluctuating coal, gas and oil market.

“We also expected a big reduction in severance tax due to lower energy prices,” Muchow said. “Here we have a reduction of $633 million, and the official estimate is 66.9 percent.”

Muchow said recent monthly severance tax collections are currently exceeding budget estimates and will be closely monitored going forward. He said energy production was not the problem.

“Coal production is up 5.9 percent,” Muchow said. “We’re on target for 90 million tons of coal. And natural gas production is up 9.9 percent. It’s all about the price. The math is pretty easy, our tax is 5 percent of the price. So we will rise or fall on price. And we had a very warm winter last winter. Who knows what’s coming in the future?”

Gov. Jim Justice has said new workers and their families coming to West Virginia will offset the 21.25 percent personal income tax cut implemented this year.

Revenue Secretary Dave Hardy noted that these revenue streams tend to slow down in July and August.

“As of the end of August our consumer sales tax revenue was up 2.5 percent from a year ago,” Hardy said. “Our personal income tax revenue as of the end of August, was down 16.2 percent. Well, we did a 21.25 percent income tax reduction. So, the fact that our revenue is only down 16.2 percent in the personal income tax category means that we still have real growth in income in our state.”

Hardy said the personal income tax cut will put a projected $696 million back into citizens pockets through the PIT reduction.

Preparing Workers For New Opportunities This West Virginia Morning

On this West Virginia Morning, Randy Yohe continues with our radio series “Help Wanted: Understanding West Virginia’s Labor Force” by looking at the state government’s job creation and retention plans.

On this West Virginia Morning, the state government has been successful in attracting national corporations to set up shop in West Virginia and they say tourism jobs are ready to explode. The challenge now is filling thousands of positions that demand a wide variety of skill sets. Randy Yohe continues with our radio series “Help Wanted: Understanding West Virginia’s Labor Force” by looking at the state government’s job creation and retention plans.

Also, Emily Rice looks at advocates that held a press conference to discuss resources available to West Virginians on the first anniversary of the Inflation Reduction Act, Curtis Tate learns the creative way Toyota of West Virginia keeps the vegetation under control around its solar array in Putnam County, and more.

West Virginia Morning is a production of West Virginia Public Broadcasting, which is solely responsible for its content.

Support for our news bureaus comes from Concord University and Shepherd University.

Listen to West Virginia Morning weekdays at 7:43 a.m. on WVPB Radio or subscribe to the podcast and never miss an episode. #WVMorning

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.

State Budget Surpluses Continue To Rise

For the 2022 fiscal year, the state had a budget surplus of $1.3 billion. Cabinet Secretary for the Department of Revenue Dave Hardy said he expects to surpass $1.7 billion in budget surpluses for the year.

Gov. Jim Justice celebrated budget numbers for the month of April that were $319 million above estimates at a Monday press conference. That brought the budget surplus for all taxes to $1.585 billion for the year so far.

“The April general revenue numbers are the tax collections, are all the different collections that are coming into the state, have surpassed all of our wildest imaginations,” Justice said. “It’s hands down, the single largest collections, I guess in our history.”

April is typically a big revenue month with personal income tax collections and quarterly tax collections for small business. During the last legislative session, the state passed personal income tax reductions which went into effect for April.

Personal Income Tax collections totaled $192.8 million above estimates for April, which is also a new all-time record for a single month despite those reductions. Record year-to-date collections of more than $2.277 billion were $439.5 million above the official estimate and 9 percent ahead of prior year receipts.

April General Revenue Fund Severance Tax collections totaled nearly $35.6 million. Monthly collections exceeded the official estimate by nearly $17.6 million. Record year-to-date general revenue fund severance tax collections of $822.5 million were 48.1 percent ahead of last year and $622.5 million above estimate.

Hardy noted that 65 percent of those severance tax revenues are from natural gas with coal only amounting for about 35 percent.

Consumer Sales Tax collections of $129.2 million were $18.8 million above estimate in April and 5.3 percent ahead of prior year collections. Cumulative collections of more than $1.398 billion were $189.6 million above the official estimate and 6.6 percent ahead of last year.

Corporation Net Income Tax collections totaled nearly $98 million in April. Monthly collections were nearly $65 million above estimate. Year-to-date collections of $330.8 million were $205.8 million above the official estimate and 17.8 percent ahead of prior year-to-date collections.

The surplus comes at a time when the state also faces unbudgeted financial needs in the West Virginia Department of Corrections and Rehabilitation system for infrastructure and payroll. Corrections needs approximately 1,000 more staff members. One proposal is to offer significant pay raises to make them competitive with surrounding states. That alone is expected to cost the state between $40 and $60 million.

Similarly, staffing issues in schools statewide are often traced back to pay. A proposal to raise the pay of new teachers that failed in the most recent legislative session had a cost of $24 million.
The departments of Child Protective Services and Adult Protective Services are also severely understaffed within the Department of Health and Human Resources and libraries across the state have millions in deferred maintenance costs.

Justice Signs Tax Bill Into Law, Lawmakers Discuss PEIA Changes

On this episode of The Legislature Today, Gov. Jim Justice signed House Bill 2526 into law today. The bill includes a 21.25 percent tax cut across all six income brackets, with the governor’s office calling it the largest tax cut in state history. Government reporter Randy Yohe has the story.

On this episode of The Legislature Today, Gov. Jim Justice signed House Bill 2526 into law Tuesday. The bill includes a 21.25 percent tax cut across all six income brackets, with the governor’s office calling it the largest tax cut in state history. Government reporter Randy Yohe has the story.

With the signing of the bill, lawmakers have taken a significant step towards finalizing a budget. However, there are still some coronavirus relief monies yet to be appropriated, and significant debate on how to use them. Reporter Chris Schulz has more.

Yohe also sits down with Del. Matthew Rohrbach, R-Cabell, and House Minority Leader Doug Skaff, D-Kanawha, to discuss changes to the Public Employees Insurance Agency as Senate Bill 268 has passed through both chambers and is on the way to the governor’s desk.

It was also deaf awareness day at the Capitol, an event of understanding and education for all West Virginians.

Having trouble viewing the video below? Click here to watch it on YouTube.

The Legislature Today is West Virginia’s only television/radio simulcast devoted to covering the state’s 60-day regular legislative session.

Watch or listen to new episodes Monday through Friday at 6 p.m. on West Virginia Public Broadcasting.

Gov. Justice Signs Tax Cut Bill

The signing of the bill comes just days after the House approved House Bill 2526, agreeing with the Senate’s proposals to reduce the personal income tax. HB 2526 represents a $754 million cut in taxes.

Gov. Jim Justice signed the much-debated tax cut bill with a group of lawmakers on stage at the Culture Center to celebrate the event with music and a balloon drop.

Justice said of the event’s jubilation, that the road to this tax cut has been rough, and today was a time to celebrate.

“God above gave us the ability to smile and laugh,” Justice said. “And with all of that, he knew this journey was gonna be tough, didn’t he? And he wants it to be that way. He wants to challenge us and we want it to be that way. But he gave us the ability to smile along the way.”

The signing into law comes just days after the House approved House Bill 2526, agreeing with the Senate’s proposals to reduce the personal income tax. HB 2526 represents a $754 million cut in taxes.

“It’s so much better in life and anything we do when we do it as a team,” Justice said. “When absolutely everybody wins, whether it be the House, the Senate, the governor’s office, all the great people in the state of West Virginia, when everybody’s on a team, and everybody wins. It’s a great, great, great day in the state.”

Personal income tax rates will be cut by 21.25 percent across all six tax brackets, retroactive to Jan. 1, 2023.

Additional personal income tax reductions will be limited to no more than 10 percent at any given time, but a formula will activate further tax cuts when the surplus allows.

Taxpayers will receive a 100 percent tax credit on their vehicles when they pay personal property taxes, and small businesses can claim a 50 percent refundable tax credit against personal income taxes or the taxes paid on machinery, equipment and inventory.

Disabled military service veterans will receive a refundable tax credit against their personal income taxes for real property taxes paid on their homes.

Senate President Craig Blair, R-Berkeley, said the proof of progress is in the evidence of economic growth in West Virginia.

“This is part of the process of what’s going on, it’s calculating the numbers, knowing what’s going on, that teamwork has been in place for over eight years,” Blair said. “And you can see it, you can see it on the jobs that are coming to the state of West Virginia, and as you grow your tax base, it actually makes it so that you have the resources to be able to give back and spread the wealth. And that is happening now in the state of West Virginia, it will only become exponential as we move forward.”

Opponents of the tax cut have voiced concerns about the state’s ability to keep up with infrastructure costs with such a high tax cut.

Blair called the tax cut momentous and mentioned that $760 million of the state’s reported $4.8 billion budget will return to the people of West Virginia.

“Four years of a flatline budget provided $588 million of the $760 million, that continued growth to be there, but we’re not counting severance taxes into the equation at all,” Blair said. “We’ll be able to do deferred maintenance, as we’ve got all that built in. That’s why we refused on the Senate side, to go to the 50 percent or 30, 40, 50, those numbers didn’t work and still maintain moving for the state forward, you got to be able to have money to be able to invest in yourselves.”

HB 2526 was signed into law Tuesday afternoon.