$$$$

The West Virginia state treasury is flush with cash.

Figures released by the state Senate Finance Committee show the state collected $639 million in taxes in September, $193 million ahead of estimates.

Revenue has exceeded expectations by $427 million for July, August and September. The state has already collected one-third of the projected $4.6 billion in revenue for the year after just three months of the fiscal year.

Tax collection on energy production continues to be a major driver behind the surplus. In just three months, severance tax collections have reached $272,150,372, or 109 percent of the projection for the entire year!

These numbers are a continuation of the previous fiscal year, when the state collected $1.3 billion more than the projected amount of $4.6 billion.

So, what does all this mean?

The Justice administration is keeping the revenue projections artificially low. The state cannot budget to spend more than it expects to collect so those overly cautious projections are a way of holding the line on spending while producing massive surpluses.

Additionally, loads of federal money have flowed into the state because of the pandemic. That is going to dry up, but for now that cash is adding to the positive revenue picture.

The issue then is what to do with the surpluses?  West Virginia has plenty of needs.

The state has delayed hundreds of millions of dollars in routine maintenance and infrastructure over the years. The National Association of Civil Engineers’ annual infrastructure report card gives West Virginia a “D” grade.

“Much of the state’s infrastructure constructed over the past 70 years has deteriorated,” the report said, “while new construction, replacement, rehabilitation and repair efforts have not kept pace with needs.”

School teachers, staff and state workers all want higher pay, and that’s not uncommon.  No one ever makes as much as they think they should.  However, low pay makes it difficult, and sometimes impossible, to fill all the positions in public education, corrections, highways and health services.

Justice and Republican legislators want to cut taxes; they just cannot agree on how.  Justice wants to reduce the state income tax rates, while Senate Republicans want to get rid of the property taxes businesses pay on machinery, equipment and inventory, and eliminate the annual property tax on vehicles.

If the state is consistently collecting more money than it is going to spend, then it is appropriate to give some it back.

Whatever state leaders decide to do they should keep in mind that West Virginia has a history of a boom-bust economy, primarily because of energy prices.  Coal and natural gas prices are at historic highs. That’s not going to last.

Budgetary decisions made today will have a profound impact on the state’s financial health in the future.

 

 

 





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