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West Virginia Tax Revenue for March Continues Surplus Streak

CHARLESTON – It might have been April Fools Day, but Gov. Jim Justice said Friday that surplus tax for the first three-fourths of the current fiscal year was no joke.

According to March tax revenue data released by the Senate Finance Committee on Friday, West Virginia ended the month with $488.1 million in general revenue tax collections, exceeding the $338 million revenue estimate by the state Department of Revenue by 44.4%, giving the state a $150.1 million surplus for the month.

March marked nine months since the start of fiscal year 2022 last July, leaving the fiscal year with three months remaining. Year-to-date tax collections were nearly $4 billion, exceeding the $3.2 billion revenue estimate by 22.9%, giving the state nearly $740 million surplus tax revenue.

Speaking during a virtual briefing with reporters Friday, Justice celebrated the positive revenue numbers.

“It is amazing beyond belief,” Justice said. “This is really great stuff.”

By pure dollars, personal income tax collections brought in the most surplus for the month. March personal income tax collections of $204.3 million were 62.5% more than the $125.4 million estimate, resulting in $78.6 million in surplus for the month. Year-to-date collections of $1.6 billion were 17.5% more than the $1.4 billion estimate, resulting in a year-to-date surplus of $244.9 million.

By percentages, the severance tax on coal and natural gas has had a successful fiscal year so far. March severance tax revenues of $83.9 million were 163% more than the $31.9 million estimate, resulting in $52 million in surplus for the month. Year-to-date collections of $500.5 million were 111.9% more than the $236.1 million estimate, giving the state $264.3 million in surplus, beating year-to-date personal income tax collections by nearly 8%.

“Severance taxes are way up. The personal income tax is off the chart,” Justice said. “It’s just all across the board. We’re just going to keep this thing rolling and everything, there is no question. I don’t care what anybody says. Not only are we on the rocket ship ride, we’re kicked back and enjoying the ride.”

In other tax collections, March consumer sales and use tax collections of $126.6 million were 16.9% more than the $108.3 million estimate, resulting in a $18.3 million surplus for the month. Year-to-date collections of $1.2 billion were 10.4% more than the $1.1 million estimate, giving the state $111.7 million in year-to-date surplus.

March corporate net income tax collections of $5.8 million were 4.4% more than the $5.6 million estimate. Year-to-date collections of $191.4 million were 113.1% more than the $89.8 million estimate, resulting in $101.6 million in surplus tax revenue.

State revenue officials and leaders of the Legislature’s two finance committees have estimated that surplus tax revenue could hit $1 billion by the end of the fiscal year on June 30.

Previously, State Code required half of any surplus at the end of a fiscal year go into the Revenue Shortfall Fund, also called the Rainy Day Fund. But Senate Bill 478, passed by the Legislature during the 2022 regular session that ended March 12 and signed into law by Justice Thursday, caps the Rainy Day Fund, allowing all surplus tax revenue to go into the general revenue fund starting in July when fiscal year 2023 begins. More than $1 billion is in the Rainy Day Fund.

The Legislature passed Senate Bill 250, the budget bill for fiscal year 2023, on March 12. The bill set the general revenue budget for $4.635 billion, a $10 million decrease from the governor’s recommended budget and two amended budget bills passed by the House and Senate earlier in the session.

SB 250 also includes more than $1 billion of additional spending items in the back of the budget which will be funded with available surplus in the order the items appear. Seventeen items are in the back of the budget, beginning with $8.8 million for the Department of Health and Human Resources Division of Human Services for medical services, and ending with $600 million for the Department of Economic Development.

“We want to make sure and manage the store properly and set ourselves up in West Virginia for decades and decades of goodness to come. We owe our young people that,” Justice said. “We owe all of those who will come behind just that. We’ve got this thing really going. We don’t want to be frivolous and just throw the money away; we want to be smart.”

Democratic lawmakers have called for using $35 million in surplus tax revenue to backfill lost revenue from a proposed pause of the 35.7 cent state gasoline tax for 30 days. Justice said it was beyond his power to pause the tax without legislation, though he has said in recent days he would consider such legislation if brought to him.

Republican legislative leadership have raised concerns about the effect of pausing the gas tax on the state’s road bonds, though Democrats believe the state’s bond covenants would allow for a pause.

According to the Senate Finance Committee’s March tax revenue report, gasoline and motor carrier tax revenue came in at $30.1 million, which was $3.8 million below the $33.9 million estimate for the month. Year-to-date revenue of $315.8 million was $5.4 million below the $321.2 million year-to-date estimate.

According to AAA, the average cost of a gallon of gas in West Virginia increased by 20.7% percent over the last month, from $3.37 a month ago to $4.06 as of Friday.

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