Gov. Jim Justice on Monday announced that West Virginia exceeded revenue expectations for December 2021 by $124.4 million. He did not mention that the surplus is largely the result of lowered expectations on key revenue markers, according to State Budget Office report archives.
In total, the state collected $506.8 million in revenue in December, blowing away the $382.4 million the budget office estimated that the state would collect to close out the calendar year and the second quarter of Fiscal Year 2022, which ends June 30.
The $506.8 million eclipses the December 2020 revenue of $382.2 million, which itself was a shortfall from government estimates, according to budget office reports from last year.
The December 2020 revenue collection was comparatively low against the December 2019 collection.
Due in part to the COVID-19 pandemic, December 2020 revenue collection was down $46.03 million from the more than $428 million collected the same month in 2019.
Justice touted the increase in revenue between December 2020 and December 2021 as the “greatest December growth rate in 5 decades” in a news release made public before the revenue numbers were posted on the State Budget Office website or released in the Senate Finance Committee’s monthly revenue report.
“We really have the economic engine of this state humming in a way that it hasn’t for a long, long time,” the governor said in a news release. “Month after month, we are setting record after record with our revenue collections. It’s flat-out outstanding. The people of West Virginia should be incredibly proud of what we’ve done, and I truly believe that we are only just getting started. There’s more and more goodness to come.”
So far this fiscal year, the state has collected $2.517 billion in revenue, about 55% of the estimated total revenue for FY2022, according to a report compiled by the Senate Finance Committee. The original revenue estimate for this point in the fiscal year was $2.124 billion.
The bulk of the of the revenue jump was because of high natural gas prices and a spike in personal income tax revenue, which increased from $169.8 million in November to $181.8 million in December, beating estimates by more than $26 million.
Severance tax collection for coal, oil and natural gas production was more than $30 million above estimates, coming in at $62.6 million. The state already has collected 80% of its total estimated severance tax revenue for the fiscal year, according to the Senate Finance report.
The severance tax revenue for December 2021 is an increase of almost $47 million from December 2020, when $15.6 million was collected, a shortfall from the $30.7 million in revenue the state estimated last year.
In November, Deputy Revenue Secretary Mark Muchow told lawmakers that state tax collection was benefiting from a spike in severance taxes driven by high natural gas prices that had doubled in the past year, but he warned that the increase could be short-lived, the Gazette-Mail reported.
State sales tax collection also exceeded expectations by $20 million, coming in at $153.9 million. Sales tax revenue is remitted to the state a month after it’s collected, so taxes collected during the holiday shopping season will be reflected in the January 2022 revenue numbers.
The state’s tobacco products tax collection totaled $13.7 million in December, missing the monthly estimate of $14.1 million by $356,926.
West Virginia Center on Budget & Policy Director Sean O’Leary tweeted about the governor’s news release, saying the Mountain State beating its own estimates still put it in the lower tier of states.
“Compared to other states, WV may be beating it’s lowered revenue estimates, but when it comes to actual revenue and GDP growth, we are trailing most states,” O’Leary tweeted.
He tweeted a link to a U.S. Bureau of Economic Analysis report showing real gross domestic product, or GDP, rates for all 50 states in the country for the third quarter of 2021. GDP is a measurement of economic activity that measures the value of goods and services produced in a given location.
West Virginia was among 13 states that saw their GDP decline during the third quarter of 2021, which ended Sept. 30. Overall, the United States’ GDP increased 2.3%. West Virginia’s GDP declined by 0.6%.
New Hampshire had the largest GDP decrease, at -3.3%.