CHARLESTON, W.Va. — Praising Republican lawmakers, his own administration and President Donald Trump, Gov. Jim Justice announced strong revenue collection numbers for the month of July during a Tuesday morning news conference at the state capitol.
The state finished collections for the first month of the new fiscal year $32 million above estimates, the highest since 2008. Justice credits three factors for the strengthening economy.
“It would be impossible for somebody to say that the Republican effort has not been successful. It would be impossible to say that since I walked in this door that things haven’t started to get better and better and better and it would be impossible to say that Donald Trump’s impact on this nation and on West Virginia and on tax reform has not had a positive impact on our people,” Justice said.
State Revenue Secretary Dave Hardy said an increase in revenue collections began last fall.
“We’ve had 10 good months of revenue and I agree with the governor that it’s going to get better,” Hardy said.
The state ended the 2018 fiscal year with a $36 million surplus, the first budget surplus in a non-budget cut year since 2012, Justice said.
July collections ended with with almost that much just for one month, Hardy said.
“We almost had the same surplus as we had for the whole previous year,” he said. “The last time we had that much revenue in July it was over a decade ago. It was 2008.”
Hardy said several collection areas were up and he predicted more tax revenue as the Roads to Prosperity highway and bridge building program hits full stride.
“July of 18 (2018) was an historic month for West Virginia with respect to revenue. By all markers, consumer sales tax, personal income tax, prior year’s tracking, we completely knocked the ball out of the park,” Hardy said.
Justice called the upward trajectory of the revenues “unbelievable.”
“It’s happening right now. It’s happening in West Virginia today,” Justice said.
Justice announced Monday that all of his companies had taken care of their tax debts, fines and penalties to the state. There’s still been no release of how much the bills totaled and how much was actually paid.
Other highlights from Tuesday’s report released by the governor’s office Tuesday include:
General Revenue Fund
July General Revenue Fund collections of $313.6 million were nearly $32.4 million above estimate and 24.1% above prior year receipts. The increase from prior year receipts was attributable to a $21.8 million increase in monthly Consumer Sales tax collections, a $17.3 million increase in monthly Personal Income Tax collections and a $16.1 million increase in Severance Tax collections. These three revenue sources accounted for nearly 91% of the $60.8 million increase in collections from the prior year and for nearly all of the surplus over estimates.
Personal Income Tax collections of $145.5 million were $10.1 million above estimate and 13.5% above of prior year receipts. The gain in net revenue from the prior year was due to higher than expected withholding tax receipts. Income withholding tax payments of $141.0 million were 13.2% above prior year receipts and reflect a combination of improving wage and employment growth. Withholding tax collections previously grew by 9.1% during the final three months of FY2018. Data from the WorkForce WV June employment report show private sector employment growth of 1.0% over the prior year with nearly 58% of the job growth concentrated in the goods producing sectors.
Consumer Sales and Use Tax collections of $87.1 million were nearly $8.9 million above estimate and 33.4% above prior year receipts. Overall collection growth, including transfers to special revenue funds, was a robust 13.3% for the month. The greater rate of growth in General Revenue Fund collections over the prior year was partially attributable to a prior year $11.3 million revenue transfer to the State Road Fund. Recently enacted legislation replaced this source of previously dedicated General Revenue with higher State Road Fund fees from other sources. Due to growth in municipal participation in the local sales tax program, the quarterly local tax distribution totaled roughly $21.0 million, an increase of 15.7% over the prior year. After rising at a more modest clip of roughly 2% during most of last year, sales tax collections rose at much higher rates of 7.8% in June and 13.3% in July.
General Revenue Fund Severance Tax collections of $12.6 million were $13.5 million above estimate and total severance tax collections for all funds were up by nearly 66%. In addition to deposits in the General Revenue Fund, total collections included the payment of two separate quarterly local coal severance tax distributions totaling $9.3 million. The quarterly distributions were 4.1% lower than payments made during the same quarter in the prior fiscal year. In addition to both the General Revenue Fund and local tax revenues, another $20.6 million in severance tax collections was deposited in the Infrastructure Bond Fund during the month. Total net State and local severance tax collections for the month were roughly $42.5 million. Collections exceeded prior year receipts by nearly 66%. A portion of the gains were associated with revenue timing alterations. The 66% gain in July followed a 24.8% decline in the prior month of June. Collection growth for the combined months of June and July was a more modest 7.2%.
Tobacco Products collections totaled $13.6 million in July. July receipts fell short of estimate by $2.3 million and prior year collections by 20%. Collections continue to trend lower partially due to product substitution away from traditional tobacco products toward e-cigarettes and other alternatives.
Business and Occupation Tax collections of nearly $10.2 million were roughly $1.1 million above estimate and 13.6% ahead of prior year receipts.
Insurance Premium Tax collections of nearly $28.8 million were $1.2 million above estimate and 7.4% ahead of last year due to higher insurance premiums in a growing economy.
July is not a major collection month for the Corporation Net Income Tax. However, net receipts of $4.0 million were nearly $0.8 million below estimate, but still 11.1% above prior year receipts. Gross collections were nearly 8.8% lower this year with net growth in revenue attributable to a $1 million decrease in tax refund payments.
Except for the $2.3 million shortfall in Tobacco Tax collections, most other revenue sources were either above estimate or just slightly below estimate for the month of July.
State Road Fund
Total State Road Fund collections of nearly $146.5 were $57.2 million above estimate and 16% above prior year receipts in July. The increase in tax collections from the prior year was led by a timing related 45.4% rise in Motor Fuel Excise Tax collections that included a larger than expected carryover from June of last fiscal year to this year. Fuel tax collections exceeded the monthly estimate by nearly $20.3 million. In addition, registration and license fees collections were up by nearly 24% and above estimate by nearly $3.5 million. Motor Vehicle Sales Tax collections were up by nearly 29% from the prior year and above estimate by $4.2 million. Federal reimbursements were up 17.2% to more than $44.1 million.