By ERIC EYRE
CHARLESTON, W.Va. — State agencies in West Virginia won’t be ordered to enact mid-year spending cuts this year, revenue officials said Monday.
The reprieve follows two consecutive years in which state agencies were required to scale back spending to keep the state budget from hemorrhaging.
In a conference call with reporters, state Revenue Secretary Dave Hardy said “spot-on” revenue projections and a sharp increase in severance tax collections make mid-year cuts unnecessary.
“We are in a much better place,” Hardy said. “We don’t have to make the painful decision about recommending mid-year budget cuts to the governor as we did last year and the year before. There’s no need at all to do any sort of mid-year budget cut, which is good news for all of our state agencies and our state employees, as well.”
By contrast, at this time last year, state revenues were $87 million behind projections, prompting then-Gov. Earl Ray Tomblin to order across-the-board cuts.
“You had to be proactive or you were going to hemorrhage completely,” Hardy said.
Severance tax collections were 60 percent higher last month than in October 2016. And for the first four months of this fiscal year, they’re up 37 percent over last year. Increased coal production and higher natural gas prices are driving the spike in severance taxes, state officials said.
Another bright spot: state Road Fund collections are up $5 million so far this fiscal year compared to last year.
“I think, big picture, we’ve improved greatly from last year, but we’re always performing a balancing act, and we’re watching these finances day by day,” Hardy said.
Cumulative general revenue fund collections of nearly $1.303 billion were $8.3 million below estimates, but $65.4 million above last year’s receipts. A slight shortfall in October was mainly attributable to a slump in consumer sales tax collections. West Virginians seem to be spending a greater share of their income on non-taxable services like health care, state officials said
“We are keeping an eye on sluggish sales tax numbers, but we aren’t worried at this point,” Hardy said. “And we are excited to see marked improvement in our personal income tax and energy industry revenues.”
The monthly sales tax deficit was offset by a $9.8 million monthly surplus in personal income tax collections. For the year, personal income tax revenues of $549 million were $7.8 million above projections. The number of working West Virginians has increased by 3,000 over the past year, driving up personal income tax collections, according to revenue officials.