Income tax season sends West Virginia revenue surplus to $1.6B
Lawmaker asks why state won't address correctional staff pay
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CHARLESTON -- April tax season in West Virginia showered the state in excess revenue, sending the surplus to nearly $1.6 billion with two months left in the 2023 fiscal year.
According to the monthly tax revenue report released by the Senate Finance Committee, year-to-date tax collections of $5.427 billion were 41.3% more than the $3.842 billion estimate by the state Department of Revenue. That leaves the state with $1.585 billion in excess tax revenue.
"It is totally incredible," Gov. Jim Justice said in an impromptu briefing Monday afternoon. "The tax collections and all the different collections coming into the state have surpassed all of our wildest imaginations. Once it's going, it's hard to stop. And the engine we have going right now is really going."
April tax revenue came in at $825.9 million, which was 62.9% more than the $506.9 million revenue estimate, resulting in $319 million in surplus tax revenue for the month. More than half of April's tax revenue surplus came from the personal income tax, with the income tax filing deadline falling on April 18 this year. According to revenue officials, it's the single largest monthly collection in state history.
Personal income tax revenue for April was $472.6 million, 68.9% more than the $279.8 million revenue estimate, resulting in a $192.8 million surplus for the month. Year-to-date personal income tax revenue of $2.278 billion was 23.9% more than the $1.838 million revenue estimate for a $439.5 million surplus.
"Not only did we break a record for total revenue, we completely shattered our record for personal income tax revenue over estimate in the month of April," said Dave Hardy, cabinet secretary of the Department of Revenue. "We like the personal income tax number, because it means West Virginians are getting higher pay and it means West Virginians are working. Those are two very good markers."
State tax officials are keeping a close eye on personal income tax revenues as the changes put in place by House Bill 2526, the tax reform compromise that cut personal income tax rates by 21.25%, goes into effect. The state Tax Division sent out revised withholding tables for employers at the end of March and early April.
HB 2526 includes a 21.25% cut across all six personal income tax brackets retroactive to Jan. 1 of the current tax year. The personal income tax cut would return approximately $590 million to taxpayers.
"Despite that historic income tax cut, we still broke the record for personal income tax collections in the month of April," Hardy said.
Higher coal and natural gas prices continue to drive revenues for West Virginia's severance tax. April severance tax collections of $35.6 million were 97.5% more than the $18 million revenue estimate for a $17.6 million surplus. Year-to-date severance tax collections of $822.5 million were 311.3% more than the $200 million estimate. Severance tax surplus revenue for the last 10 months was $622.5 million, representing nearly 40% of the state's total year-to-date tax revenue surplus.
Consumer sales and use tax revenue for April was $129.2 million, which was 17% more than the $110.4 million revenue estimate for a $18.8 million surplus for the month. Year-to-date sales tax revenue of $1.398 billion was 15.7% more than the $1.209 billion revenue estimate, giving the state $189.6 million in surplus.
April corporate net income tax collections of $98 million were 196.8% more than the $33 million revenue estimate for a $65 million surplus. Year-to-date corporate net income tax collections of $330.8 million were 164.7% more than the $125 million estimate for a $205.8 million year-to-date surplus.
"Today is an incredible day of celebration, I'll tell you that. I knew we could do it. I've known it all along, and I believed," Justice said. "These numbers are off the charts, and we should all be so proud, and we should all be so happy. If this isn't the biggest news in this state today, then I don't know what it could be. Today, we're really going."
But not everyone was happy. With the state expected to exceed its earlier estimate of a possible $1.7 billion tax revenue surplus by the end of fiscal year 2023 on June 30, some are wondering why certain needs continue to go unfunded, such as West Virginia's correctional staff vacancy crisis.
Delegate Joey Garcia, D-Marion, said on Twitter he continues to work with leadership in the House of Delegates, the Senate and the governor's office toward a future special session to address ways to recruit and retain correctional employees.
According to the Division of Corrections and Rehabilitation, the overall employee vacancy rate for the division was 1,022, with 27% of positions unfilled as of mid-April. The correctional officer vacancy rate alone was 729, or a 32% vacancy rate for officers. Justice issued a second state of emergency last August and called up the West Virginia National Guard for help, with a 12-month cost estimated at $20 million.
Several bills were offered to address the correctional vacancy crisis with none making it out of finance committees in the House and Senate, including House Bill 2895. The bill would have granted a cost-of-living stipend to correctional officers of up to $10,000 per year.
"West Virginia exceeded its April 2023 tax collections estimate by $319 million, but we have yet to act to improve officer and staff vacancies in regional jails and prisons, even though it would cost approximately $40M/year for $10K across the board pay raises," Garcia said. "And a $10K pay raise most likely costs half of that when you factor in $20M in funds going to pay the National Guard to work temporarily in facilities and unwanted and unnecessary overtime payments to correctional workers costing 1.5 x rate per hour of work."
Steven Allen Adams can be reached at sadams@newsandsentinel.com.