The Times West Virginian

May 1, 2009

April’s state tax revenue figures better than expected

Exceed estimates by at least $15 million

By Lawrence Messina

CHARLESTON — The April revenue figures West Virginia lawmakers want to see before they craft a new state budget show tax collections in better shape than expected, Manchin administration officials said Thursday.

Deputy Revenue Secretary Mark Muchow said the month’s general tax revenues should exceed estimates by $15 million to $20 million. That would put state government back on track to end the current budget year June 30 balanced or with a minor surplus.

A key month for annual tax collections, April’s numbers suggest the Legislature won’t have to cut spending in the next budget beyond the $200 million Gov. Joe Manchin has already announced, Muchow said.

“We needed to be on target for this year to reaffirm our estimate for next year,” he said. “The $200 million adjustment will probably hold.”

But Muchow also does not expect much of a revenue surplus, if any, to help lawmakers close that hole. Half of any excess general revenue must go to the state’s emergency reserve fund.

Both Manchin and legislative leaders decided to hold off on completing the new budget after general revenue missed projections by a combined $92 million in January and February. Lottery revenues are also down. The budget Manchin proposed to lawmakers when their regular session began relied on $4.4 billion from those two sources.

The House and Senate finished that 60-day session on April 11, and plan to complete a new state budget between May 26 and June 6. Muchow said the delay should also give lawmakers a better sense of the rules governing the influx of federal stimulus funds.

“They’re still being developed, but the picture has become clearer,” Muchow said.

A chunk of West Virginia’s estimated $1.8 billion share is meant to help stabilize the budget, though both the governor and lawmakers have sworn off tapping these temporary funds for anything but one-time expenditures.

At least one other state, Mississippi, has postponed work on its next budget because of lagging general revenue. All but four states — Alabama, Michigan, New York and Texas — begin their budget years on July 1.

West Virginia is among at least 42 states that have projected gaps in their upcoming budgets, according to the most recent review by the National Conference of State Legislatures. These threatened deficits totaled $121 million at one point, though the latest tally shows states have since reduced them to a combined $67.4 million.

The Mountain State’s coffers were expected to take in nearly $479 million during April, to bring the general revenue total so far this budget year to nearly $3.3 billion. Muchow credits personal income and sales and use taxes yielding more than projected. The former is likely due to improved processing of returns, he said. Given the ongoing recession, Muchow said sales and use taxes exceeding their $89.9 million estimate by about $3 million was a “nice surprise.”

The weakened economy still has that tax category down by around $40 million for the budget year. Other leading general revenues sources below estimate to date include corporate net and business franchise taxes.

Though fading, severance taxes on coal and other natural resources have helped offset much of these declines, Muchow said.

“The question for the next year is whether the energy markets will deteriorate any further,” he said.