CHARLESTON, W.Va. — Gov. Jim Justice has told his staff to prepare a “flat budget” for state lawmakers to consider when the 60-day regular session begins next Wednesday.
State Revenue Secretary Dave Hardy said Thursday the instruction came from Justice following a review of the recent revenue collection numbers. The state did collect $6.9 million more in taxes than thought it would in December but overall collections are behind estimates by $33 million after six months of the fiscal year. The state has made up $16 million of that shortfall following bad collection numbers in July and August and Hardy is confident they can cut further into the shortfall in the next six months.
That flat budget from Gov. Justice won’t include a pay raise proposal, Hardy said during an appearance Thursday on MetroNews “Talkline.”
“We have recommended to the governor, at this time based on the numbers that we have, that we don’t see that there’s any way he can build a pay raise into the budget,” Hardy said.
Justice’s budget doesn’t stop lawmakers from proposing pay raises and finding money to fund them. Teachers and state workers have received an average five percent increase each of the last two budget years at a cost of approximately $205 million that have to be funded each year, Hardy said.
“We had two five percent pay raises back-to-back. We’re very fortunate,” Hardy said. “Everything came together, the governor’s leadership, the cost savings that was in the budget and that we had record-breaking revenue numbers. They were extraordinary.”
Justice said the revenue collections of the last two years need to be considered when thinking about this year’s numbers.
“The thing to remember is that most of the surplus we saw in the historic FY 2019 numbers was built into the FY 2020 budget, and we are pacing close to those record-setting numbers,” Justice said in a Thursday news release. “It’s really phenomenal.”
Hardy said personal income tax and consumer sales tax continue to perform just above last year’s levels but it’s severance tax collections that are having the greatest impact on the revenue collections at a$37.8 million below estimates halfway through the fiscal year. Coal exports have plummeted and the glut of natural gas sent mcf prices even lower.
“It’s severance tax that’s what is dragging us down right now even though consumer sales tax and personal income tax are helping bring us back up,” Hardy said.
There are still no plans for midyear budget cuts by the Justice administration. Justice was considering a $100 million cut a few months ago but now believes the state can get close to its revenue projections over the second half of the fiscal year.
Hardy said a flat budget doesn’t necessarily mean there will be no increased spending proposals in Justice’s budget but the bottom line will look close to the current spending plan.
.@DaveHardyWV talks with @HoppyKercheval about December’s financial figures and whether there is any money for a pay raise. WATCH: https://t.co/wkudfIRZCB pic.twitter.com/5E7wlk4j6p
— MetroNews (@WVMetroNews) January 2, 2020
Revenue collection specifics released by the governor’s office Thursday include:
Personal income tax collections of nearly $174.8 million were 2.9% ahead of prior year receipts. Cumulative personal income tax collections of nearly $973.6 million were $33.6 million below estimate and 1.0% ahead of prior year receipts. Following a 2.8% decline in the first two months of the year, collection growth resumed at a 2.6% pace over the past four months.
Consumer sales tax collections of $127.3 million were more than $1.1 million below estimate in December and 2.6% ahead of prior year receipts. Cumulative collections of $683.1 million were $2.8 million below estimate and 1.6% above prior year receipts. After falling by 0.8% during the first two months of this year, collection growth rebounded by an average of 2.6% over the past four months.
December severance tax collections totaled nearly $43.0 million. Monthly collections were more than $0.1 million above estimate and 5.1% below prior year receipts. Year-to-date general fund severance tax collections of nearly $136.1 million were $37.8 million below estimate and 34.9% below prior year receipts. Wholesale natural gas prices slumped from an average of roughly $2.86 per MCF in 2018 to significantly less than $2.00 per MCF in recent weeks. In addition, the value of foreign coal exports slumped over the past few months following a peak of activity reached in January of 2019. Year-to-date local tax distributions paid out of general revenues were up by 11.6% from the prior year due to higher energy prices, and growth in coal, oil and natural gas sales in prior periods.
B&O tax collections totaled nearly $17.6 million in December and $67.4 million year-to-date. Monthly collections were up 121% from the prior year largely due to a large carryover of deposits due at the end of November to early December. Cumulative collections were $13.4 million above estimate.
Corporation net income tax collections totaled $30.4 million in December and more than $97.5 million for the year-to-date. Monthly collections were nearly $2.6 million below estimate. Cumulative collections were still $23.3 million above estimate and 0.1% above prior year receipts.
November tobacco products tax collections of $14.1 million were $0.9 million below estimate and 1.9% above prior year receipts. Cumulative collections of nearly $85.6 million were $7.4 million below estimate and 4.0% below prior year receipts.
Departmental collections totaled more than $8.2 million in December and nearly $15.2 million for the year-to-date. Cumulative collections were more than $6.6 million above estimate and nearly double prior year cumulative receipts.
Interest income receipts totaled nearly $1.8 million in December and more than $15.1 million for the year-to-date. Cumulative receipts were nearly $2.0 million below estimate but also nearly 80% ahead of last year.