WV nets $58 million thanks to fiscal cliff

The state of West Virginia’s budget is going to benefit from the fiscal cliff.

State Deputy Revenue Secretary Mark Muchow told MetroNews a one-time personal income tax windfall brought in $58 million more than projected in April.

Muchow said the revenue was fallout from last year’s fiscal cliff talks in Washington. He said taxpayers in West Virginia and other states didn’t know how Congress would change taxes in 2013 so many handed out additional income at the end of 2012 in the form of bonuses, an extra paycheck or capital gains.

The state had no way of knowing the impact on year-end 2012 revenue or personnel income taxes until taxes were due April 15, Muchow said, and the personal income tax revenue ended up being 30 percent more than last year.

The state entered April with a $49 million revenue collection deficit but ended the month at a $5 million surplus.

“We knew there was going to be something coming, but given that Congress doesn’t do this very often (and) this is the first time they’ve done it in the manner they did, trying to figure out what that’s going to be when it comes to taxpayer behavior is a very hard equation,” Muchow said.

The unexpected boost will help a tight state budget year, though Muchow cautioned it doesn’t solve issues with a struggling economy.

“It’s a one-time windfall. It’s good but it’s one of those things we hope doesn’t happen too often,” Muchow said. “We’ll be balanced this fiscal year. There are no issues about us running below where we cannot balance the equation.”

But the state continues to struggle with severance tax collections that are running behind for the fiscal year. Revenue collections could fall below estimates the remaining two months of the fiscal year.

The state’s revenues are also being helped with a legislated $28 million spending cut and several million dollars from the income tax return reserve fund.