By JARED HUNT
DAILY MAIL BUSINESS EDITOR
West Virginia tax collections fell nearly $2.1 million behind expectations in September, pushing the total shortfall during the first quarter of the state's fiscal year to more than $34.3 million, according to the latest data from the State Budget Office.
The shortfall means the state will need to see a strong rebound in revenue growth over the next nine months if officials hope to avoid ending the fiscal year in the red.
The state's general revenue fund received about $406.5 million in various tax collections in September, less than one percent less than expectations. September marked the fifth month in a row where state revenue collections fell below expectations.
Deputy Revenue Secretary Mark Muchow said state revenue not only missed expectations, but declined 1.2 percent from the amount collected between July and September last year.
With the state more than $34 million behind on collections, Muchow said the state would have to see significant growth in revenue over the next nine months to make up the gap.
He said revenue would have to see revenue growth of 2.8 percent or more compared to last year to close the gap by the end of the fiscal year on June 30.
"Most years I'd say 2.8 percent (growth) is easy to get," Muchow said. "But this year, I'd say it'll be more than a struggle."
Of the 26 different tax, fee and revenue transfer categories that contribute to the general revenue fund, only five have seen growth in revenue compared to the prior fiscal year. The vast majority have either declined or stayed flat compared to last year's levels.
"Most everything is actually running in negative territory across the board," Muchow said.
Muchow blamed tepid wage growth and consumer spending over the last six months for the declines.
He said personal income tax collections were running 4.6 percent less than last year, with revenue from corporate taxes down 8.5 percent.
The $301 million in sales taxes collected since July 1 is roughly $943,000 less than the amount collected during the first three months of the last fiscal year.
Muchow said the bright spot was severance tax collections, which are now running about 53 percent more than last year's collections thanks to growth in the state's natural gas industry.
While coal still makes up a hefty portion of state severance tax collections, coal tax collections fell 13 percent in the first few months of the fiscal year. Natural gas collections soared, however, rising 207 percent compared to last year.
With natural gas tax collections tied to the price of gas, Muchow said the rest of the state's fiscal year could hinge on whether natural gas prices rise or fall.
"If natural gas prices stay firm, that would be good news," he said. "If natural gas prices weaken on us again, well, that would probably not be good news."
Contact writer Jared Hunt at busin...@dailymail.com or 304-348-4836.