W.Va. tax revenues continue decline

October 3, 2013

CHARLESTON, W.Va. (AP) — West Virginia’s tax collections in the fiscal year’s first quarter are more than $34 million below estimates and the state will need strong revenue growth over the next nine months to avoid a deficit, a state revenue official said.

Figures from the State Budget Office show that tax collections declined for the fifth consecutive month in September. September’s tax collections were about $2 million below estimates.

Deputy Revenue Secretary Mark Muchow told the Charleston Daily Mail that the decline is due to sluggish wages and consumer spending.

First-quarter personal income tax collections were down 4.6 percent from the previous fiscal year. Sales tax collections since July declined by about $943,000 to $301 million.

Muchow said that the state will need revenue growth of at least 2.8 percent to close the gap by June 30, 2014.

“Most years I’d say 2.8 percent (growth) is easy to get,” Muchow said. “But this year, I’d say it’ll be more than a struggle.”

Most of the 26 tax, fee and revenue transfer categories that contribute to the general revenue fund have declined or remained flat compared to last year’s levels. Only five categories saw revenue growth.

“Most everything is actually running in negative territory across the board,” Muchow said.

The slide in tax collections comes despite a 53 percent increase in severance tax collections resulting from growth in the state’s natural gas industry. Natural gas collections jumped 207 percent compared to the first quarter of the previous fiscal year.

Meanwhile, coal tax collections dropped 13 percent.

“If natural gas prices stay firm, that would be good news,” Muchow said. “If natural gas prices weaken on us again, well, that would probably not be good news.”