West Virginia starts fiscal year in the black in July
CHARLESTON — July tax collections helped West Virginia start fiscal year 2022 ahead, though far below collections for the previous fiscal year when the tax filing dates were moved due to COVID-19.
According to data from the Department of Revenue and the Senate Finance Committee, tax collections for the month of July were $305.8 million, 10.1% ahead of revenue estimates of $277.7 million for the month but 36.8% below last July’s collections of $484 million. That gives the state a $28.1 million surplus.
“We need to watch the store, don’t we? We need to mind the economics of who we are and what is going on within our state,” Justice said Monday during his COVID-19 briefing. “We’ve done that, and we’ve produced surplus after surplus in really trying and difficult times.”
The disparity in revenue collection between July and July 2022 was due to the income tax filing deadline being moved from April 2020 to July 2020 after businesses were shut down in the spring of 2020 to slow the spread of the coronavirus.
“We started last July off with a negative number…this July we just started off with and concluded July with $28.1 million above surplus,” Justice said. ”
The $305.8 million does not include the $68 million the state borrowed from the Rainy Day Fund at the start of the fiscal year. State code also allows the governor, by executive order, to borrow from the Rainy Day Fund between the start of the new fiscal year and Oct. 31 to pay the state’s bills until tax revenue for the new fiscal year comes in. The funds must be repaid within 90 days.
July tax revenues were buoyed by strong collections in personal income tax, corporate net income tax, and the severance tax on coal and natural gas.
Personal income tax collections of $141.8 million in July came in 11.6% above the $127.1 million revenue estimate, but 48.7% below last July’s collections of $276.4 million. Corporate net income tax collections of $11.1 million in July came in 101.4% above the $5.5 million revenue estimate, but 81.7% below July 2020 collections of $60.4 million.
The severance tax on coal and natural gas have typically become in below estimates for most of the last fiscal year, but collections for the last few months have improved. July severance tax collections — estimated to have a $7.6 million deficit — instead came in at $3.4 million, which was $10.1 million more than expected and $11.1 million more than July 2020 when the state showed a $6.7 million deficit in severance tax collections – a 95.8% increase.
“I just love this,” Justice said. “This is coal miners going back to work. This is our gas people working and everything…it just tickles me to death.”
The only major tax that didn’t perform as expected for July was the consumer sales and use tax. Sales tax revenue was $89.78 million, which was 4.9% below the $94.4 million revenue estimate and just slightly below July 2020 collections of $89.85 million.
“The net of the whole thing is it was a great month and great work by all our revenue folks,” Justice said. “This was our first month of fiscal year 2020…we’re just going to keep on rolling.”
The fiscal year began July 1.