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West Virginia tax revenue continues upward trajectory

CHARLESTON — West Virginia’s tax revenue harvest continues to be bountiful with November collections continuing to exceed expectations.

According to data released Thursday morning by the Senate Finance Committee, November tax collections of $480.2 million was 30.7% more than the $367.6 estimate set by the state Department of Revenue for the month, resulting in a $112.7 million surplus for November.

Fiscal year-to-date tax collections of $2.5 billion was 38% more than the $1.8 billion revenue estimate, resulting in a $687.5 million surplus for the first five months of fiscal year 2023. Year-to-date collections also exceeded tax collections for the same five-month period during fiscal year 2022 by 24.3%.

The severance tax on coal, oil, and natural gas led the way by pure percentages due to higher prices and demand for fossil fuels. November severance tax collections of $112.4 million exceeded the $24 million revenue estimate by 368%, resulting in a $88.4 million surplus for the month.

Year-to-date severance tax collections of $453.6 million exceeded the $83.4 million revenue estimate by 443.8%. Severance tax surplus for July through November was $370.2 million, making up more than half of the state’s $687.5 million year-to-date tax revenue surplus.

The consumer sales and use tax also performed well. November sales tax collections of $153.2 million were 10.9% more than the $131.1 million revenue estimate, resulting in a $15.1 million surplus for the month. Year-to-date sales tax collections of $671.5 million were 14.7% more than the $585.7 million revenue estimate for a $85.8 million surplus.

November corporate net income tax collections of $11.8 million exceeded the $2 million revenue estimate by 491% for a $9.8 million surplus. Year-to-date corporate net income tax collections of $133.9 million exceeded the $53 million revenue estimate by 152.6% for a $40.2 million surplus.

Personal income tax collections were a miss in the short term, however. November personal income tax collections of $158.9 million came in 6.1% below the $169.3 million revenue estimate, or $10.4 million below estimates. But year-to-date personal income tax collections of $982.2 million exceeded the $872.5 million revenue estimate by 12.6% for a $109.7 million surplus.

The personal income tax could become front-and-center once again during the 2023 legislative session beginning in January. Gov. Jim Justice will once again propose a plan to cut personal income tax rates across all brackets by 10% with the goal of phasing out the personal income tax completely.

An attempt to pass a similar bill failed during the 2022 legislative session earlier this year by the House of Delegates. Justice called a special session this past summer for his own 10% personal income tax cut plan that also had support from the House of Delegates. But the state Senate never took up the bill, choosing to push a proposal to eliminate tangible personal property taxes and replace the lost revenue to counties and school systems directly from the general revenue budget.

The Senate plan required voters to approved Amendment 2, a constitutional amendment that would have given lawmakers authority to eliminate six categories of tangible personal property taxes, including taxes on machinery and equipment, inventory, and motor vehicles. Justice went around the state to rally voters to oppose Amendment 2, which failed 65% to 35% on the Nov. 8 ballot.

A 10% cut to the personal income tax would return more than $250 million to taxpayers if the Legislature approves such a bill. Revenue from personal income tax collections made up more than 42% of the $5.889 billion in tax collections during fiscal year 2022 that ended in June. The state ended that fiscal year with more than $1.3 billion in tax surplus.

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

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