Tax Collections Story Archives - West Virginia Public Broadcasting

July Revenue Up, But Severance Taxes Off Considerably

July is often one of the slowest months for revenue collection, according to a press release from Gov. Jim Justice’s office, but general revenue collections were almost $8 million higher than expected. Total collections were $335 million.

The state has recorded record budget surpluses in recent years with the fiscal year that just ended totaling a $1.8 billion surplus. This has been achieved mostly through flat budget projections.

“Although our surplus this month isn’t as high as we’ve seen in the past, what this proves is that we’ve been minding the store properly by keeping our base budget flat,” Justice said. “We had phenomenal surpluses last year, and I strongly believe we are going to have a strong surplus this year too, despite the effects of ‘Bidenomics’ at work with runaway inflation eating into West Virginians’ pockets. It’s the perfect time to mind the store properly, which is what West Virginians elected me to do and I have done.”

Personal Income Tax collections for July were $13.9 million above estimate with collections of $145.6 million. Corporation Net Income Tax collections of $19 million were $8.5 million above estimate and 31.7 percent ahead of last year.

The other major sources of General Revenue for July included $93.6 million in Consumer Sales Tax, $25.5 million in Insurance Premium Tax revenues, and $13.7 million in Tobacco Products Excise Tax.

The press release also noted that severance taxes on coal and natural gas have gone down after a considerable drop in prices.

Severance Tax collections for July of this year are 93 percent lower than last July with a difference of more than $50 million.

For this year’s July severance taxes, the state received just $3,756,000 on a budget of $27,400,000.

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.

Southern W.Va. Program Teaches New Tax Solutions for Independent Workers, Businesses

Tax season is a time that some Americans plan and save for all year. But it’s not always as easy as filling out paperwork before starting work. For independent workers or small business owners in southern West Virginia, it’s one of the most challenging parts of the job.

Nationally, ninety-four percent of the net job growth from 2005 – 2015 was in alternative job markets. With the downturn in the coal industry, some West Virginians are being forced to look to alternative income sources.

A recent report found and documented the challenges that come with being an independent worker in five southern West Virginia counties.

The study was part of the Benefits U project and meant to help better understand the challenges of independent workers in southern West Virginia and test a solution.

Diane L. Browning, project manager for WISER’s Rural Retirement Project, helped to interview independent workers in southern West Virginia.

“There is a widespread need for benefits,” Browning said. “Benefits are an economic stabilizer for a lot of people, (who are) self employed, (they) don’t have easy access to that.”

The study found that independent workers needed help with three main areas of benefits; taxes, emergency savings and retirement savings.

“Unlike employees, their taxes aren’t withdrawn. When they make income, they’re obligated to calculate the amount of taxes they owe and set it aside,” Browning said. “And really, most people just come to terms with that at tax time and find that they owe money.”

The counties surveyed in the report include Boone, Logan, McDowell, Wyoming and Mingo because they have been adversely affected by the downturn in the coal industry. The program was supported by a grant from the Appalachian Regional Commission’s POWER (Partnerships for Opportunity and Workforce and Economic Revitalization) initiative.

The report is part of the Women’s Institute for a Secure Retirement, or WISER, and the Rural Retirement Project. The Benefits U project focuses on independent workers including freelancers, hairdressers, childcare providers, tattoo artists, gig workers, small business owners, entrepreneurs and more.

“They feel like they don’t have much money to save when they have trouble making ends meet,” Browning said. “If someone doesn’t have enough money to get the new tire on their car, they’re going to be tapping into their retirement savings.”

Throughout the region, Browning heard stories from West Virginians who had found a way to provide for their family through side jobs, entrepreneurship and service providers but needed help to provide benefits on their own.

“I mean really (the stories) broke my heart, like a guy that had overcome a drug problem, but he really had a hard time getting a job,” Browning said. “So he was doing landscaping on his own and taking care of his four year-old daughter living with his mother.”

Though broadband connectivity or wifi is still inconsistent, financial technology could be a solution because most residents are familiar with online banking and have access to technology.

“I guess the happiest surprise was just how wired we are. And even in the back hill and holler, people have asked for access to smartphones,” Browning said. “And they’re pretty sophisticated about using them. So there’s a lot of opportunity for delivering good services via financial technology.”

The Benefits U project also tested a “FinTech,” or financial technology, solution called Catch. It’s a company that basically does the math for independent workers using a formula that the worker sets up with a smartphone or computer. As the website says, the worker selects benefits, links to a bank, and determines the percentage of each paycheck to set aside.

“One of the messages we heard from in this research is that people really rely on trusted messengers, trusted people in their family, their friends, their co-workers for financial information,” Browning said. “So we are going to promote this financial technology platform with independent workers through organizations that serve them.”

The Women’s Institute for a Secure Retirement is helping to raise awareness about Catch within the independent worker community across the state beginning this week, by turning to trusted resource centers in communities across the state. WISER is first partnering with Mountain Heart, a childcare agency, to help spread the word about this platform. The organization also plans to partner with farmers and tech groups such as Central App, a tech training firm.

State Officials: 2018 Budget Year to End in Surplus

Gov. Jim Justice and his revenue staff say West Virginia is heading toward a budget surplus as the state nears the end of the 2018 fiscal year.

The governor and his revenue staff announced May’s revenue collections were more than $20 million above estimates. The entire month saw nearly $330 million in total revenue collection.

Several key collections came in above estimates, including personal income tax by $8.5 million, severance tax collections by nearly $4 million, and consumer sales tax by nearly $1 million.

General Revenue Fund collections remained on target in May, and Cumulative State Road Fund collections were $12.5 million above estimates.

Justice says the state is headed toward a budget surplus at the end of the month, and fiscal year 2019 looks promising.

Deputy Secretary Mark Muchow says a big reason for the increase in revenue is an increase in employment across the state of 9400 jobs since this time last year.

West Virginia Road Revenue Up $16M in July

West Virginia tax authorities report collections rose to $73.6 million for the state road fund in July, the first month of higher taxes and fees to support it, exceeding last year’s collections by almost $16 million.

The Legislature this year approved increasing variable minimum wholesale gas tax by 3.5 cents a gallon, the vehicle sales tax from 5 to 6 percent and the vehicle registration fee from $30 to $50.

The measures were pushed by Gov. Jim Justice to help fund a major road repair and rebuilding program statewide intended to spur the state economy.

Nick Casey, Justice chief of staff, says severance taxes collected on natural gas, coal and oil production were $25.6 million in July, about 80 percent higher than the same month last year.

Sales Tax Collections Decline Amid Fiscal Uncertainty, June Flood

Officials say West Virginia’s tax collections did not meet estimates again in July, marking 15 months since the state met or exceeded those estimates.

Secretary of Revenue Bob Kiss says West Virginia tax collections were nearly $33 million short of estimates for the month. A large portion of that was due to a decline in the state’s consumer sales tax collections.

The sales tax is often called one of the most stable forms of revenue for the state, but in July alone, collections came in more than $22 million below estimates.

Revenue officials say while June’s devastating flooding had some impact on those collections, other factors, including uncertainty at the end of the fiscal year in June about the health of the state’s overall budget, also played a role.

The last time consumer sales tax collections were this low was July 2004.

Revenue officials say they do not believe the low consumer sales tax collections will be a trend for the 2017 fiscal year and those revenues will rebound in August.

0809FloodMoneyINTVlong.mp3

An interview with Sec. Bob Kiss about the impacts June's flooding with have on the state budget.