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October tax revenue down in West Virginia

CHARLESTON — Despite positive natural gas and coal severance tax revenue numbers in September, overall tax revenue numbers for the month of October came in slightly below estimates.

According to a report from the Senate Finance Committee, October tax revenue came in at $354.1 million, which was $3.5 million below estimates — or 1 percent. The Department of Revenue estimated the state would take in $357.6 million in October.

Year-to-date collections of $1.452 billion were $33 million less than the $1.485 that revenue officials estimated the state would collect four months into fiscal year 2020, a 2 percent drop.

“As of the end of October the state has collected 31 percent of its total estimated yearly revenue,” according to the Senate Finance Committee report. “This current trend puts the state not on track for meeting yearly revenue estimates.”

October is the third month out of the last four months of the fiscal year starting in July that tax collections came in lower than estimates. Revenue officials announced at the end of last month that state agencies have been asked to prepare for a possible mid-year $100 million budget cut — 4.6 percent per state agency — should tax collections continue to come in below estimates.

“We targeted 4.6 percent just to get a round number of some sort, and that’s how we came up with $100 million,” said Dave Hardy, secretary of the Department of Revenue.

“We actually decided we would try to take a look at each individual agency and use a surgical approach and give the head of the agency a chance to say, ‘I could do this or that,'” Hardy said.

Two bright spots were severance tax revenue from coal and natural gas and the consumer sales and service tax. Revenue from the consumer sales tax came in at $125.6 million, 24 percent above estimates. Year-to-date sales tax collections of $455.9 million were 2 percent above estimates.

Severance tax revenue came in 12 percent above estimates at $16.7 million. However, year-to-date severance tax collections of $75.9 million were 7 percent below projections. Revenue officials blame a lack of demand for steam coal used in power plants, a slowdown in metallurgical coal exports, and an oversupply of natural gas for the down severance tax numbers.

Personal income tax revenue came in 10 percent below estimates, bringing in $149.1 million instead of $160 million. Year-to-date personal income tax collections came in 2 percent below estimates at $653 million.

Hardy said the halting of major natural gas pipeline construction, such as the Mountain Valley Pipeline and the Atlantic Coast Pipeline, not only resulted in a decrease in natural gas production in the state, but also resulted in more than 4,000 construction workers leaving the state, harming income tax revenue.

“We did not over-budget this year on severance. Where we got a bit of a surprise was the pipelines getting shut down,” Hardy said.

Steven Allen Adams can be reached at sadams@newsandsentinel.com

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