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WV’s February tax intake $10.3M over projections

By PHIL KABLER

Charleston Gazette-Mail

CHARLESTON, W.Va. — For the first time in months, the West Virginia revenue report for February was printed in black ink, with tax collections of $251.8 million exceeding projections by $10.3 million, or about 4 percent.

“For the first time this year, we actually exceeded estimates,” Deputy Revenue Secretary Mark Muchow said during the department’s monthly revenue briefing, referring to the state fiscal year, which runs from July 1 to June 30.

However, as Revenue Secretary Dave Hardy stressed, the recovery will not be enough to close a $123 million shortfall in the 2016-17 state budget, with just four months remaining in the budget year.

For once, all major categories of taxes beat projections, with sales tax collection of $92.9 million coming in $3.5 million above estimates; income taxes of $76.9 million, $3.9 million above projections; severance taxes of $28.8 million, $2.6 million ahead of estimates; and business and occupation taxes of $11.5 million, $1 million up.

Year-to-date, severance tax collection has rebounded to within $125,000 of projections, at $160.6 million, after starting the first couple of months of the fiscal year nearly $15 million below estimates.

“Severance tax is our most positive tax trend this year,” said Muchow, crediting a rebound in natural gas prices for the recovery.

Year-to-date, however, overall tax collection of $2.5 billion remains $106 million below estimates, and is $25.5 million lower than the same point last year.

Hardy said that makes it critical to move forward with Gov. Jim Justice’s proposal to sweep about $60 million out of state agency special revenue accounts and $60 million out of various reappropriated funds, to close the current-year budget gap without raiding the state’s Rainy Day emergency funds.

“One thing that is so essential to our bond ratings … is that we keep our Rainy Day Funds at no less than 15 percent of our general revenue budget,” Hardy said.

Currently, the Rainy Day Funds contain $693.4 million, while 15 percent of the general revenue budget is $641 million.

Justice initially proposed using the Rainy Day Funds to close the current year’s budget gap, which would have dropped the funds below the 15 percent threshold.

Hardy said the proposal to “sweep every account close or almost down to zero” protects the Rainy Day balance this year, but still will require major budget reforms to avoid shortfalls in future years.

Justice’s budget plan includes about $345 million in tax increases, hikes that have generally been panned by legislative leaders. The Legislature’s leaders said they will make a counterproposal with a budget plan that relies primarily on spending cuts.

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