West Virginia’s state revenue collections concluded the fiscal year $254.8 million ahead of estimates, according to information distributed by the state Senate Finance Committee.
State officials had anticipated bringing in $5.264 billion during the fiscal year that just concluded. Instead, the state recorded $5.519 billion — 105% of projections.
“As we expected, Fiscal Year 2025 will end in a surplus – and that’s a good thing for West Virginians,” Gov. Patrick Morrisey said in a statement distributed by his office.
“However, looming federal actions and an increase in state mandatory spending requires us to make smart, fiscally conservative decisions as we begin the new fiscal year. As Governor, I submitted and approved a balanced budget for Fiscal Year 2026, but the state still has fiscal challenges for 2027 and beyond.”
Vernon Criss, the Finance Committee chairman in the House of Delegates, said the year-end figures are a good sign for state financial health. Criss said the numbers make it clear that lawmakers will be able to allocate dollars toward surplus spending priorities.
“Overall, I think the revenues to the state show the economy is growing and that we will continue to grow,” Criss, R-Wood, said in a telephone interview.
The latest finance figures show that the state finished ahead or about on target in several areas of revenue collection.
Personal income tax collections for the year were anticipated to be $2.023 billion but instead came in at $2.126 billion — 105% of projections.
That came after several rounds of significant personal income tax cuts by the state.
“Remember, we’re working off an over 25% cut in personal income tax,” Criss said, “and those numbers show that our numbers are not down by 25% as far as collections are concerned. It shows that as our economy grows, those numbers continue to grow in spite of the cut.”
Severance taxes, which are the taxes imposed on the extraction of natural resources like coal, oil, gas or timber, had been anticipated to be $406 million but instead came in at $439 million, 108% of the estimate.
Consumer sales taxes had been estimated at $1.84 billion for the fiscal year but came in slightly below that at $1.82 billion, 99% of the estimate.
The state now turns the corner to a new fiscal year.
Prior to the most recent legislative session, the Morrisey administration had forecast a $400 million budget gap for the coming fiscal year. State officials dealt with that gap through a mix of one-time funds, lottery excess dollars and some budget cuts.
Criss said the relative strength of the fiscal year that just concluded calls that gloomy outlook into question.
“It appears that $400 million deficit did not take place, was never going to take place — and I don’t know that the administration understands how budgeting works as far as how we do our budgeting for the Legislature,” Criss said.
Senate Finance Chairman Jason Barrett said the yearly performance reflected good results overall. But Barrett said some aspects of the most recent report gave reason for concern. He pointed toward consumer sales tax collections for the most recent month, which dipped.
“When you look at personal income tax, which is above collections, and then you see consumer sales tax below estimates, I think you can draw a correlation there that when personal income tax is up, consumer sales tax should be up,” said Barrett, R-Berkeley.
“The theory is people earn more money and therefore pay more personal income tax, they should have spent more on consumer sales tax.”
Barrett said he is confident in the state’s overall revenue picture for the new fiscal year, projecting a surplus next year too.
During legislative interim meetings last month, a top financial official said the state still anticipates some significant budget pressures up ahead, including increased costs associated with insurance for public employees and monetary support for students seeking education outside the public school system.
One of the upcoming challenges is anticipated cost increases through the Public Employees Insurance Agency. State financial officials anticipate a $49 million cost increase for fiscal 2027 and a cost increase of $56 million for fiscal 2028.
Another growing expense for the state is the Hope Scholarship, which provides financial support for families pursuing educational options for students outside the public school system.
The estimate is $190 million in base build from Hope Scholarship, Peter Shirley, deputy secretary of the Department of Revenue, told lawmakers.
“That’s something that we’re going to have to address,” Criss said.
Seen another way, West Virginia has experienced contracting state revenue, said Kelly Allen, executive director of the West Virginia Center on Budget & Policy.
That takes into account comparing the year’s collections to actual prior year’s collections — rather than comparing the collections to the estimate.
“With the close of FY 2025, West Virginia has now had two consecutive years of revenue decline, ahistoric outside of a recession. The only other time this has happened in the last 25 years was during the 2008- 2010 Great Recession, but this time it was self-inflicted by deep tax cuts rather than driven by an economic downturn,” Allen said.
“Compared with last year, we saw declines in two of the state’s four largest sources of general revenue (personal income tax and corporate net income tax), and neither corporate net income tax nor sales tax collections have increased as a result of income tax cuts, as some proponents promised would happen.”
She too warned of the budget pressures still ahead in a new fiscal year.
“With significant budget obligations ahead, including PEIA, the school funding formula, and flood mitigation infrastructure, lawmakers must stop doubling down on failed trickle down economics and raise the revenues needed to make investments that serve our people and grow our economy.”