CHARLESTON, W.Va. — For the first time in three years there will be no need for a mid-year state budget cut, state Revenue Secretary Dave Hardy said Monday during the monthly release of state revenue numbers.
Through the first four months of the fiscal year, tax collections have missed revenue estimates by just $8 million. At this time last year the state was behind estimates by $87 million, Hardy said.
“We are in a much better place,” Hardy said. “Because the revenue projections are spot-on we don’t have to make the painful decision about recommending mid-year budget cuts.”
Year-to-date revenue growth is 5.3 percent. The current budget figures in 3.9 percent growth for the entire fiscal year.
Employment numbers have increased by more than 3,000 over the past year and that has driven personal income tax collections about $8 million above estimates.
Although more people are working they are spending less on taxable goods. State Deputy Revenue Secretary Mark Muchow said Monday sales tax collections are weak, missing estimates by $17 million so far this fiscal year. Muchow said residents are spending their money on more services than goods.
“Particularly health care services,” Muchow said. “Health care services are generally not subject to sales tax and prescription drugs are not subject to sales tax. A large portion of the increase in disposable income and consumption is going toward health care these days.”
The severance tax, which is what the state collects on coal and natural gas, is below estimates for the budget year but continues to outperform last year’s collections. Those collections are up 37 percent through the budget’s first four months.
Muchow said while there is momentum in wages and salaries and corporate taxes the budget needs natural gas prices to increase or there could be a problem later this fiscal year.
“That’s the one thing that could cause us heartburn later on this year. Natural gas prices recently have been trending significantly lower than national levels and we need to see that reverse itself in the coming months,” Muchow said.
Other revenue collections notes:
–Corporate Net Income Tax collections are up $10 million
–Year-to-date collections for the Tobacco Tax are down 15.7 percent
–The Motor Fuel Tax is bringing in 50 percent more than last year at this time after an increase approved by state lawmakers