West Virginia coal, gas tax gains cut budget deficits

June 3, 2017
Shale Play

CHARLESTON, W.Va. (AP) - West Virginia's tax collections from natural gas and coal production climbed again in May, with overall state revenues exceeding budget estimates by $53 million. The increase prompted state tax officials to significantly lower the projected deficit that's been driving the state budget impasse.

They now forecast $170 million in higher receipts for the fiscal year that starts July 1, Revenue Secretary Dave Hardy said. Recent revenue gains and funding adjustments should balance this year's budget, which closes out in 24 days, he said.

"It's been a very difficult fiscal year," Hardy said. "But I think we can see the light at the end of the tunnel."

The state received $344 million in tax collections in May, almost 20 percent higher than the same month last year. Severance taxes on natural gas, coal and oil topped $49 million for the month, almost $16 million above the estimate and double from the level a year earlier.

Tax officials largely credited the increase to "a recent sharp upswing in natural gas prices and higher coal sales relative to last year." Gains are expected to continue in the near term.

Severance taxes for natural gas were up 30 percent through April compared with the previous fiscal year, while coal was up 4 percent, Deputy Secretary Mark Muchow said.

May increases were also reported from personal income taxes and insurance premium taxes, largely attributed to carry-over collections from April. Payroll withholding taxes were higher. Sales taxes were up for the month.

"Overall the state's economy and revenue picture has improved greatly since the first quarter of the fiscal year," Muchow said.

The improving tax receipts already have been incorporated in recent budget proposals, according to House leaders. They have opposed Gov. Jim Justice's push to raise the sales tax to help close a budget deficit originally projected at $500 million.

The state revue estimate for the coming year is now $4.225 billion with no additional taxes.

Justice's latest budget proposal calls for about $4.35 billion in general revenue spending including some cuts for current programs.

The governor told reporters Tuesday afternoon that he's standing by his latest budget proposal. It would cut income taxes by seven percent, raising the sales tax from 6 to 6.35 percent, and establish tiered taxes on coal and raise the wholesale gas tax by 3.5 cents a gallon for highway rebuilding, all without making steeper budget cuts.

"The problem you have right now is people trying to re-trade the deal," he said.

 
 

 

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