West Virginia Deputy Revenue Secretary Mark Muchow says it could be a very interesting second half of the state budget year with the new federal fiscal cliff legislation.
Muchow says the bill that passed Tuesday will have an impact on state revenue collections. He says there could be a decrease in sales tax revenue because residents will have less to spend with the elimination of the temporary Social Security payroll tax deduction.
After six months of the fiscal year the state has collected $3.8 million more in taxes than it thought it would. Muchow says personal and corporate income tax collections are above estimates but severance tax collections continue to underperform at $19 million below estimates. Coal production is down and natural gas prices remain at near record lows.
Muchow predicts the second half of the fiscal year will likely be much the same with very little growth in revenue.
“We’ve known about that for several years now. It’s been in the budget numbers going forward. Those challenges do not change a whole lot,” he said.