Joint Committee on Finance hears update on state’s finances from Department of Revenue officials

West Virginia Press Association Staff Report

CHARLESTON, W.Va. – In an abbreviated meeting of the Joint Standing Committee on Finance, on Monday, committee members heard remarks from Acting Cabinet Secretary Larry Pack with the West Virginia Department of Revenue. 

“We’ve got a good story to tell in West Virginia,” Pack began. “Through 10 months the total revenue that West Virginia has received is over $4.7 billion. That means our year-to-date surplus through the first 10 months is nearly $637 million.”

According to Pack, West Virginia has exceeded its April economic estimate by approximately $114 million, noting, “We expect that by June 30, our fiscal year will be over budget by $750 million.”

“It’s been consistent all year with respect to what we really felt like that we would get,” Pack said. “Probably the biggest story as far as any revenue is the Corporate Net Income Tax – it was up 36.5% in April, and more than 50% from the month before. Corporate net collections for the year are up almost 19%.”

“West Virginia corporations are making money and paying taxes,” Pack continued. “They’re growing, and that’s a really good story. I think a lot of it relates to the hard work that this body has done over the past number of years.”

Personal Income Tax collections, Pack further explained, are down “about 18%” over last year. Pack stated that the decrease in collections is due to the record tax cut passed by the legislature during the 2023 Regular Session. 

“We believe that by the end of the year, that reduction will be more in the 15% level,” Pack added. 

Joining Pack for the presentation was Revenue Secretary Mark Muchow, who began by advising committee members that the state’s General Revenue Fund collected $634.7 million during the month of April.

“That was $114.5 million above estimate,” Muchow said. “Compared to last year, it was down 23.2%.”

According to Muchow, sales tax revenue for April was approximately $3 million below estimate, and personal income tax collections were 18.3% below estimate. 

“A year ago we had very high energy prices,” Muchow noted. “Lot’s of income coming in from royalties and whatnot that came in on the individual income tax return. We also passed a salt bill that was retroactive to 2022, and those payments were due in April of last year. So that enhanced April collections for last year.”

“This year, we incorporate the 21.25% [personal income] tax reduction, and a few other factors – the salt is no longer the big player, it’s no longer a retroactive double-pay tax, and that’s the reason why we’re down,” Muchow added.

Muchow further noted that while the state’s total revenue is over $4.7 billion, that number is down 13% over the previous fiscal year. 

At the conclusion of the presentation, Del. Gary Howell, R-Mineral, asked a question regarding Severance Tax Collection, while noting that $50 million was collected in the previous fiscal year.

“But last year, we were only $35 million,” Howell said. “And that was when we had record-high prices. Can you explain that?”

In response, Muchow said, “Actually the record-high prices last year occurred mostly in the first half of the fiscal year.”

“By the second half of the fiscal year, prices had come way down,” Muchow added. “So the prices this year as opposed to last year were not that significantly different. It had more to do with the timing of the revenue collections than it did with the price change.”

The Joint Standing Committee on Finance will meet next during the Summer Interim Legislative Session, scheduled for August 11 – 13.