West Virginia Ends Fiscal Year With Record Revenue
CHARLESTON – Buoyed by a recovering post pandemic lockdown economy and federal COVID-19 stimulus, West Virginia saw record-breaking tax revenue and an overflowing rainy day fund for fiscal year 2021 that ended Wednesday.
According to preliminary numbers in the June report from the Senate Finance Committee based on the original revenue estimate prepared last July by the State Budget Office, the state ended fiscal year 2021 with $4.990 billion in tax collections for the general revenue fund, the largest amount collected according to 11 years worth of data.
“You have economic numbers that are off-the-chart good in every way,” Gov. Jim Justice said at his Thursday COVID-19 briefing at the Capitol. “You have the economic engine of this state running absolutely phenomenally.”
June collections came in at $497.6 million, which was 5.5% more than the $471.8 million revenue estimate, resulting in a surplus for the month of $25.8 million. Added to the total of year-to-date surplus dollars, the state collected $415.3 million more than the $4.575 billion revenue estimate, 9 percent more than the estimate and 11% more than the previous fiscal year.
Subtracting the $150 million in fiscal 2021 surplus appropriated by the Legislature for road and bridge maintenance in a special session June 7 and $250 million in surplus supplemental appropriations approved by the Legislature last week in a second special session, that leaves an end-of-fiscal-year surplus of $15.3 million.
By law, half of any budget surplus at the end of a fiscal year must go to the rainy day fund. Lawmakers already put $50 million of the $250 million surplus appropriated last week into the fund, taking it from $938.6 million to $988.6 million. Additional end-of-year funds could take the fund close to $1 billion, the largest amount since 2014 when the fund had $955.9 million.
Year-to-date personal income tax revenue was $2.24 billion, which was 4.1% more than the $2.16 billion estimate and 15.2% better than the previous fiscal year, resulting in a $88.6 million surplus.
More personal income tax collections came in towards the beginning and end of the fiscal year due to moving the income tax filing deadline twice, from April 2020 to July 2021 and from April of this year to May due to financial hardships caused by the COVID-19 pandemic. More people also returned to work, with the state unemployment rate nearly returning to pre-pandemic levels.
Revenue from the consumer sales and use tax was $1.5 billion, which was 8% more than the $1.4 billion estimate and 10.7% more than fiscal year 2020, resulting in a $113.3 million surplus. The state saw no months in fiscal year 2021 when collections came in below estimates, showing that West Virginians continued to spend. Eligible West Virginians also received direct payments for COVID-19 economic relief and federal pandemic unemployment benefits giving people additional spending money.
The corporate net income tax came in at $316.1 million, which was 118.8% more than the $144.5 million estimate, resulting in $171.6 million in surplus at the end of the fiscal year. The corporate net income tax also bested the previous fiscal year, coming $164.6 million more than collections in fiscal year 2020, a 108.6% increase.
“We more than doubled the amount of corporate net tax brought into West Virginia the previous year,” Justice said.
Despite an up and down fiscal year, the severance tax on coal and natural gas ended the fiscal year in the black. The severance tax came in at $267.4 million, which was 6.5% more than the $251 million estimate, resulting in a surplus of $16.4 million. The severance tax was in the red for half of the fiscal year, but collections came in better starting in March.
“From the standpoint of severance, we have had a major, major, major recovery in the last half of the year,” Justice said. “That’s great stuff for all our coal miners, gas and oil workers, and lots and lots of folks all across our counties and everything else.”