The Times West Virginian

West Virginia

May 3, 2014

State tax revenues still behind estimates

Natural gas, not coal, driving factor behind leap in severance tax

BECKLEY — With no evidence yet of the benefits of a statewide hiring freeze and mid-year budget cuts, West Virginia’s tax revenues are behind estimates by more than $40 million, with shortfalls in income tax and sales tax collections for April.

Even April’s beer and tobacco tax revenues were down by 5 percent and 4 percent, respectively.

Secretary of Revenue Bob Kiss said Friday the state is “on track” in spite of the fairly dismal year-to-date numbers. Collections for the fiscal year are below estimates in all tax categories from business and occupation to transfer taxes, with the exception of property tax, insurance tax and severance tax.

Deputy Secretary Mark Muchow said natural gas, not coal, is the driving factor behind the severance tax leap, which increased $14.9 million over estimates.

The State Road Fund’s numbers were up, except for the motor fuel tax, which was only slightly below estimates for April. With collections at $31 million above estimates, Muchow pointed to vehicles that use more gasoline on the road for the increase.

Muchow said unemployment is gradually getting better in the state, at an average of 6.1 percent.

Wetzel County has the highest unemployment in the state at 12.7 percent, while neighboring Monongalia County’s unemployment numbers are the lowest at 4.1 percent.

Unemployment figures play into the amount of withholding tax funneled into state coffers, as well as sales tax figures, which were down in April by nearly $11 million.

According to data from the Federal Reserve Bank of Richmond, West Virginia’s population stayed the same, while its real personal income for December 2013 fell 0.1 percent from December 2012.

 Kiss said the state would be in worse shape if not for the foresight of legislators 20 years ago who decided to create the Rainy Day Fund. Leaders tapped the fund for a budget shortfall for the first time this year. Kiss said that kind of planning was “critically important,” and the state’s conservative management and planning practices should continue.

The state’s overall economy is expected to rebound in the 2016 fiscal year, as natural gas production from  drilling in Marcellus shale increases, and a proposed “cracker” plant to process that gas is built in Wood County.

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