Early data: West Virginia August tax revenue beats expectations
Second month in a row for higher collections
CHARLESTON — Buoyed by increases in personal, corporate income taxes and consumer spending, tax collections for the month of August exceeded estimates even during the coronavirus-fueled recession.
According to preliminary data released from the Senate Finance Committee and data from the State Budget Office, West Virginia brought in $331.4 million in tax collections in August, two months into the new 2021 fiscal year.
The $331.4 million was 12.1 percent more than the $295.6 million the Department of Revenue estimated the state would receive. It was also only 1.4 percent less than the $336.1 million the state brought in August 2019.
August tax collections bring the state’s year-to-date tax collections to $815.4 million, 11 percent ahead of estimates and 18 percent ahead of fiscal year 2020 collections this same time last year. The 2021 fiscal year began July 1.
Gov. Jim Justice said Wednesday a more detailed report on state tax collections will be available today, but he was pleased with the preliminary numbers.
“Overall, the numbers in this state are unbelievable,” Justice said. “August is almost on the heels of July. In addition to all of that, from a cash standpoint we’re close to $250 million to the good at this time. The same two months, before we had COVID, of last year we had $21 million. We’ve got 12 times the money today that we had last year.”
The state is still benefiting from moving the state income tax filing deadline from April 15 to July 15. Personal income tax collections for August came in at $134.6 million, which was 3.5 percent above the $130.1 million estimate and only 5 percent below personal income tax collections for last August. The state collected $2.6 million from the corporate net income tax instead of the $500,000 state revenue officials estimated.
Consumer spending also exceeded estimates and last fiscal year’s tax collections. The Consumer Sales and Use Tax brought in $129.4 million in August, which was 3.5 percent more than the $125 million estimate and 4 percent more than the $124 million brought in a year ago.
An area dragging state tax revenues down is the severance tax on coal and natural gas. In August, the state brought in $3.9 million in severance tax revenue, 31 percent below the $5.6 million estimate and 87 percent below August 2019 collections of $28.8 million.
Justice and the Legislature came to an agreement of a conservative budget for fiscal year 2021, passing a $4.574 billion general revenue budget on the last day of the legislative session on March 7, a 1.3 percent decrease from the fiscal year 2020 passed in 2019.
Even with the conservative budget, most lawmakers didn’t foresee how bad the coronavirus pandemic would be and what the economic implications would be. The fiscal year 2020 budget only included $2 million for coronavirus planning after Delegate Isaac Sponaugle, D-Pendleton, and Sen. Ron Stollings, D-Boone, pushed for the funding.
A week after the session ended, all in-person schooling was shut down. A week after that, an executive order shut down all non-essential businesses between the end of March and beginning of May, with residents ordered to stay at home during that time.
Revenue officials estimated a $500 million hole in the fiscal year 2020 budget by the end of June after the state moved the income tax filing deadline from April 15 to July 15, combined with the reduced consumer sales tax revenue from closed businesses. But consumer spending rebounded as businesses reopened, helping tax revenues improve. Many West Virginians went ahead and paid their income taxes early, also blunting the effects of the shuttered economy.
The state also tapped into Medicaid surplus dollars after the federal government increased the Medicaid match rate from 76 percent to 81 percent. Officials used $100 million of the $1.25 billion Coronavirus Aid, Relief and Economic Security Act meant for reimbursement of coronavirus-related expenses to help offset costs. As a result, the state ended fiscal year 2020 on June 30 with a $28 million budget surplus.
Justice said the healthy tax revenues would be helpful should the virus continue to affect people’s lives and the economy going into 2021.
“If the economics blow up, that means there’s all kinds of things we can’t do,” Justice said. “The state is really doing it.”
Steven Allen Adams can be reached at email@example.com.