State revenue slightly ahead of forecast
After initially suffering a shortfall, West Virginia's general revenue fund is running a slight surplus at the midpoint of the current budget year.
According to revenue figures released by the State Budget Office Wednesday, state tax collections are running about $3.8 million ahead of expectations for the first six months of the 2013 fiscal year.
Since July 1, the state brought in $1.96 billion in various taxes and fees collected by state agencies. While slightly ahead of forecasts, that total is about 1 percent less than the amount collected by this point last year.
For the month of December, the state brought in $363 million in general revenue, about $1.8 million more than forecast and 8 percent greater than in December 2011.
December's revenue results marked the fourth straight monthly surplus for the general revenue fund.
The fund had logged a $16.5 million shortfall during July and August - prompting fears that officials might have to enact mid-year budget cuts - but the revenue turnaround since then has erased those concerns.
Deputy Revenue Secretary Mark Muchow said gains in both personal income tax and corporate net income tax collections helped boost revenues in December.
For the month, the state collected $152.6 million in personal income tax, about $10.7 million more than the $141.9 million officials had forecast.
But Muchow said the increase might have been caused by several one-time factors.
One of those may have been a result of the so-called fiscal cliff, a $600 billion combination of tax increases and spending cuts that were averted by Congress this week.
Muchow said in November some taxpayers anticipating higher rates in 2013 might find ways to book some unrealized income in 2012. The December tax data appeared to support that notion.
"Year-end bonuses, severance pay and possible reactions to the fiscal cliff all likely contributed to a 9.2 percent rise in total December personal income tax receipts," Muchow said.
"After rising by an average annual rate of just 1 percent during the first five months of the year, wage and salary withholding tax collections surged by 14.7 percent in December," he said.
Since July 1, the state has collected $808.2 million in personal income taxes, about $14.7 million more than estimates and 3.9 percent greater than last year's collections.
Corporate income tax collections over the last six months are also up 25 percent compared to 2011, Muchow said.
The state has collected $126.4 million in corporate income and business franchise tax revenue over the last six months, about $15.4 million more than estimates.
Muchow said most of the increase in corporate taxes is due to a reduction in the amount of tax refunds paid by the state.
State severance tax revenues had been lagging earlier this year due to declines in coal production, but the $46.7 million collected last month was slightly ahead of expectations and 20.5 percent more than last December.
Muchow said this year-over-year jump in revenue was the result of a calendar effect and did not represent a surge in production.
"The last collection day in December 2011 fell on Friday the 30th, and the last collection day this year fell on Monday the 31st, which is the official due date for this tax," Muchow said.
Last year, more companies ended up paying their December severance tax on the first day of January.
"The State collected nearly $20.4 million in severance tax during the first two days of January last year and $8.9 million during the first collection day of January this year," Muchow said.
Despite the calendar effect, Muchow said revenue declines from coal seem to have leveled off in recent weeks.
"There does appear to be some industry stabilization following more than a year of decline," he said.
One of the few revenue categories to fall short in December was consumer sales tax.
The state recorded $92 million in total sales collections for the month, about $7.5 million less than the $99.5 million that had been projected.
The shortfall was odd, considering it coincided with a strong holiday shopping season.
Muchow said the decline was mainly due to a one-time transfer of revenue to the State Road Fund.
Each year, the state transfers some sales tax revenue to the road fund to cover a small portion of road construction contracts. That transfer typically occurs in June, but Muchow said officials asked for an earlier than usual transfer in December.
"Due to cash flow needs, the Department of Transportation received a partial payment of nearly $6.5 million in December," Muchow said.
While it had a negative effect on December revenue, Muchow said the transfer would balance out by the end of the year.
"The general revenue fund sales tax collections will be recouped in June when a lower than usual year-end transfer occurs," he said.
Contact writer Jared Hunt at firstname.lastname@example.org or 304-348-5148.