Despite cash infusion, state revenue collections still down $41 million

There are two months remaining in the fiscal year and despite a $70 million infusion from the state legislature, the state is still lagging behind its revenue estimates by $40.9 million. State officials discussed the latest tax collection numbers Friday. 

State Revenue Secretary Bob Kiss said the revenue deficit would be well above $100 million if it weren’t for the money from the legislature and a spending cut and hiring freeze from Gov. Earl Ray Tomblin.

“We put a plan in place, the governor did, beginning in December and we think we’re on track to close the hole,” Kiss said.

Deputy Revenue Secretary Mark Muchow said the bright spot in April came with severance tax collections at $49.9 million which beat estimates by $14.5 million. That’s up17.5 percent from last April. Muchow attributes the increase to natural gas not coal. He said the state’s economy is transitioning.

“The shift of economic activity is going on within the state of West Virginia with the tremendous growth in certain parts of the state (natural gas) but also declines in other parts of the state that rely very heavily on coal,” Muchow said.

The revenue from the withholding tax and consumer sales tax were both down in April along with revenues from beer and tobacco taxes. The state Road Fund continues to do better than expected. It’s now more than $31 million above estimates. Muchow attributes it to the purchase of more vehicles that use more gas.

Muchow and others believe the severance tax growth will be strong for the remaining two months of the fiscal year along with continued growth in B&O tax revenues and sales tax growth. Secretary Kiss said the aforementioned moves in the current state budget will also pay off.

“There are savings we’ll see at the end of the year in the cost reductions and hiring freeze that will offset a large part of that $40.9 million (the current revenue shortfall),” Kiss said.

Kiss, the former House of Delegates speaker, said he was thankful for the legislature’s history of being fiscally conservative. He said without those funds the current situation would be worse.