First Quarter of Fiscal year 2020 $29.8 million under revenue estimates
From the Office of the Governor:
CHARLESTON, W.Va. – Gov. Jim Justice reported today that September 2019 revenue collections resulted in a $20 million surplus, which was 5.4% above prior year receipts.
The month of September also marks the end of the first quarter of Fiscal Year 2020. As a whole, Q1 FY2020 came in $29.8 million under revenue estimates.
“More than anything, what this shows is that we always need to remember that we have to live within our means,” Gov. Justice said. “Last year, we set an all-time record for the greatest one-year revenue growth in the history of our state. Our estimates kept getting revised upward and upward: four times.
“Naturally, we were bound for a dip eventually. We saw our numbers turn around for the good again here in September. But, if nothing else, our first quarter this year shows that we have to continue to err on the side of caution and remember we still have work to do and more people to help. And that’s exactly what we’re going to do.”
In addition to the latest revenue figures, credit rating agency Fitch Ratings recently affirmed the state’s “AA” Issuer Default Rating. In a report released by Fitch, the agency categorized the rating as “stable” and praised West Virginia’s “sizable level of reserve funds” and its “strong ability to control revenue and spending policy.”
The following is a summary of September 2019 revenue collections:
September General Revenue Fund collections of more than $477.2 million were more than $20 million above estimate and 5.4% ahead of prior year receipts. Year-to-date collections of more than $1.098 billion were $29.8 million below estimate and 1.8% below prior year receipts. The cumulative shortfall was due to a significant slump in energy prices, particularly for natural gas and slower-than-anticipated growth in income withholding tax revenues, partially due to a work stoppage involving interstate gas pipeline projects. Coal sales have also recently slowed due to a global economic slowdown, with lower steel demand and lower steam coal sales.
A summary of major components follows:
Personal income tax collections of more than $226.7 million were $0.2 million above estimates in September and 4.2% ahead of prior year receipts. Income withholding tax receipts grew by less than 2% during the month. However, overall growth was boosted by increases in return payments and non-resident withholding tax collections. Cumulative collections of nearly $503.6 million were $21.5 million below estimate and 0.2% higher than prior year receipts. WorkForce WV data continues to show strong employment growth. However, the loss of an estimated 4,000 jobs in natural gas pipeline construction due to current legal hurdles is weighing down overall wages and tax revenue growth at this time.
Consumer sales tax collections rose by more than 3.8% in September, as monthly collections of $125.8 million were more than $1.6 million above estimate. Cumulative collections of nearly $330.3 million were more than $2 million below estimate and 0.9% above prior year receipts.
September severance tax collections totaled $33.9 million. Monthly collections were $0.4 million above estimate and 0.4% above prior year receipts. September 2019 severance tax collections benefited from a more favorable monthly end date compared to last year; when the last day of the month fell on a Sunday. Year-to-date general fund severance tax collections of more than $59.2 million were $26.4 million below estimate and 38.6% below prior year receipts. Wholesale natural gas prices slumped from an average of roughly $2.86 per MCF in 2018 to 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. Overall year-to-date severance tax collections were down nearly $33.9 million from last year, as compared with a $37.3 million reduction in general fund deposits. The quarterly local coal severance tax distributions paid out of general revenues in July were actually up by 21.7% from the prior year due to growth in coal sales in the prior quarter.
B&O tax collections totaled more than $13.8 million in September and total $35.4 million for the year-to-date. Monthly collections were up 121% from the prior year and cumulative collections were up by 37.6%, largely due to lower investment tax credits for this year. Cumulative collections were $9.2 million above estimate.
Corporation net income tax collections totaled more than $43.7 million in September and more than $50.2 million for the year-to-date. Monthly collections were more than $10.5 million above estimate and 6.2% ahead of last year. Cumulative collections were $12.1 million above estimate and 6.8% above prior year receipts.
September tobacco products tax collections of more than $13.2 million were $1.5 million below estimate and 3.9% below prior year receipts. Due to a timing alteration in cigarette stamp purchases, cumulative collections of nearly $42.9 million were $5.6 million below estimate and 7.3% below prior year receipts.
Interest income receipts totaled $3.8 million in September and nearly $9.3 million for the year-to-date. Cumulative receipts were nearly $0.4 million above estimate and nearly 133% ahead of last year.