CHARLESTON, W.Va. — The state is going to have to make up $28 million in the next three months if it’s going to hit revenue estimates by the end of the current fiscal year.
The Justice administration released tax collection numbers for March Monday and they show the state missing its estimate for the month by $10.9 million, leaving it short by $28 million when you consider the first nine months of the fiscal year.
But state Revenue Secretary Dave Hardy said he remains “cautiously optimistic” the collections will hit the mark by the budget year’s June 30 conclusion.
“April is obviously very, very important and we expect with the economy improving we’re going to see an up tick in our income tax receipts,” Hardy told reporters during a conference call.
April, because of the annual tax collection deadline, is usually the largest revenue-producing month for the state.
And even though they missed estimates in March, state Deputy Revenue Secretary Mark Muchow said both personal income tax and sales tax collections are “trending in the right direction.” Personal income tax collections are up $6 million this fiscal year while the growth rate for sales tax is $1.3 million, Muchow said.
“The income and sales tax are probably going to lead the way in the fourth quarter in terms of revenue growth and that’s going to lead us toward that estimate,” Muchow said. “The areas of caution would be the different reactions to federal tax reform. We may see a little bit of a pullback.”
Muchow said employment numbers are up. He said it was excess in of one percent in February.
“Numbers are improving on the payroll side,” he said.
Both corporate income tax (-$6.4 million) and tobacco tax (-$3.7 million) missed estimates in March although that may have been caused by a timing issue with the last day of the month falling on a Saturday. Timing also contributed to a down month in motor fuel tax collections.
The severance taxes for coal, oil and natural gas beat estimates by $5.2 million in March. Those collections are down $21 million through the first nine months of the fiscal year.
“The outlook is pretty stable,” Muchow said. “Some of the shortfall should close a littler bit (by July 1).”
Gov. Jim Justice raised revenue estimates for next fiscal year, which begins July 1, by $58 million. Muchow said that adjusted estimate is about next fiscal year not this one.
“Next year is a brand new year and it’s certainly within the realm of possibility, particularly if employment numbers pick up next fiscal year, it’s in the realm of possibility,” Muchow said Monday.
Justice’s increase prompted a settlement to the education workers strike but the legislature decided not to budget the additional amount but instead didn’t fund several of Justice’s other desired spending increases to come up with the money.