CHARLESTON, W.Va.¬†—¬†Despite an increase in severance tax collections in March, state revenue officials believe the revenue shortfall this fiscal year could reach as much as $123 million.

There’s no reason to change the projection, state Revenue Secretary Dave Hardy told reporters in a conference call Thursday.

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State Revenue Secretary Dave Hardy says April will be a big month for collections.

“There was nothing that happened in March, or the whole first quarter for that matter, that altered our estimate that the shortfall for this current fiscal year will be $123 million (worst case scenario),” Hardy said.

The current revenue hole for this fiscal year is approximately $80 million. The Justice administration and lawmakers have agreed on a $101 million fix for that hole. The bill (HB 2801) is scheduled for second reading in the state Senate Friday. It includes taking $41.7 million out of the Rainy Day Fund and $60 million by sweeping various special revenue accounts, Hardy said.

“We talked to the legislature and the governor was more than amenable to coming up with a plan to do that,” Hardy said.

Severance tax collections in March of $40.2 million were $13.1 million above estimates. State Deputy Revenue Secretary Mark Muchow said the price of natural gas has been on the increase and that is actually helping coal.

“The higher natural gas prices will remain there’s greater substitution for coal at power plants because the two compete together,” Muchow said. “That’s what we’ve been counting on all year long—is for the severance tax to pick up momentum. It means our shortfall won’t be as bad.”

Overall $331.5 million was collected in March exceeding estimates by $26.3 million. Income tax collections exceeded estimates in March by nearly $4 million but collections for corporate net income tax and consumer sales tax were down.

Hardy said April would be a big month for collections because of the income tax filing deadline.

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