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West Virginia’s January Revenue Falls Short of Estimates as 2026 Budget Issues Loom

CHARLESTON — Tax collections in West Virginia for January came in below estimates for the third time since the fiscal year began in July as state officials look for money for the next fiscal year.

According to the monthly reported released Monday morning by the state Senate Finance Committee, January tax collections for the general revenue budget for the current fiscal year came in at $478 million, which was 2.8% below the $491.8 million estimate set by the state Department of Revenue.

January joins August and October as the third month that tax collections did not meet estimates since the start of fiscal year 2025 last July. But fiscal year-to-date tax collections remain just barely in the black, with $3.15 billion for the first seven months of the fiscal year. That is .9% above the $3.13 billion revenue estimate, providing the state a $27.9 million surplus.

State revenue officials under former governor Jim Justice estimated that West Virginia will end the current fiscal year June 30 with nearly $80 million in surplus. But according to Gov. Patrick Morrisey and his revenue team, several state departments and agencies will need additional funding to make it to the end of the fiscal year.

In a press conference last week, Morrisey said the Department of Tourism, Public Defenders Services, and the Department of Homeland Security/Division of Corrections and Rehabilitation will need a combined $81 million in supplemental appropriations, otherwise some of those departments and agencies could run out of funding as soon as March. Morrisey said he inherited these issues from the previous administration.

“We know that a lot of the salaries, the medical care, the expenses are set to expire in March,” Morrisey said. “That was intentionally done so that there would be a need to come back to the Legislature. We have to work to find a solution to that.”

Morrisey has said that his revenue officials project a $400 million hole in the fiscal year 2026 general revenue budget beginning from the day he took office on Jan. 13. Morrisey cited dependence on one-time monies for previous budgets by the Justice administration, the underfunding of departments and agencies, and growth in future expenses. When asked in December, Justice said there would be no budget hole in the next fiscal year.

Morrisey will be presenting his fiscal year 2026 budget to lawmakers on Wednesday, Feb. 12, at the start of the 2025 regular legislative session during his first State of the State address. The state Constitution requires lawmakers to pass a balanced budget.

Of the major sources of tax revenue for the state, only the consumer sales and use tax and the corporate net income tax came in above estimates.

January sales tax revenue of $163.6 million was 3.4% above the $158.2 million revenue estimate, providing the state a $5.4 million surplus. Fiscal year-to-date sales tax collections of $1.052 billion was .7% above the $1.050 billion revenue estimate, for a $7.5 million surplus.

Corporate net income tax collection for January was $27.6 million, or 214% above the $8.8 million estimate, providing an $18.8 million surplus for the month. Fiscal year-to-date corporate net income tax collections of $205.4 million was 22% above the $168.2 million estimate, providing the state a $37.1 million surplus with five months remaining in the current fiscal year.

January personal income tax collections of $217.6 million were 1.3% below the $220.5 million estimate, while fiscal year-to-date personal income tax collections of $1.298 billion were 1.3% below the $1.315 billion revenue estimate. West Virginia’s 2% and 4% personal income tax cuts went into effect on Jan. 1.

“I strongly support the ongoing effort to continue to cut taxes. But as you know, I’m very clear last year … I said, please continue to cut taxes, but you must pay for them,” Morrisey said. “The taxes have not been paid for. … We’re going to find a way to make that happen.”

Despite the cold snap in January, severance tax collections for coal, oil and natural gas continue to come in below estimates. January severance tax collections of $19.9 million was 58.9% below the $48 million revenue estimate for the month. Fiscal year-to-date severance tax collections of $147.6 million was 28.9% below the $207.5 million estimate.

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