G-Fin™: Tax Revenue Is Down in West Virginia
It appears West Virginia is going to have a difficult time reaching its original $100 million projected surplus in tax collections by the end of the fiscal year.
WV Deputy Revenue Secretary Mark Muchow says collections from the state’s severance taxes were $9.6 million below estimates in April contributing to a year-to-date overall revenue collection surplus of $47 million.
WV Officials had projected it would collect about $100 million more in taxes this budget year so the legislature decided to use $65 million of that projection for the increase in the cost of Medicaid.
Muchow says the number may be hard to meet by July 01, 2012.
“We’ll do our best to get there. There is no guarantee that we will get there, but most of that should come through,“ Muchow said.
If the $65 million total is not met, lawmakers may have to cut the state budget.
It has been the energy industry that decreased the surplus numbers.
Muchow says coal production has been down 7-8% in recent months because of a mild winter and problems in Europe.
He says unless there is a very hot summer, steam coal tax collections will continue to be soft.
He says prices for natural gas are also down.
The legislature was hoping for the $100 million revenue surplus for the aforementioned Medicaid costs and the state’s Rainy Day Fund.
Muchow says it would take a 2% revenue growth between now and July to make the $100 million mark.
So far tax collection growth has only been 1.5% this budget year.
“We have some severely significant headwinds in terms of the energy market against us so it will be a bit tough to get to the 100-million dollar mark at this point,“ Muchow said.
The coal market is expected to be soft for at least the next year.