CHARLESTON, W.Va. - When economic times are good, income tax revenue flows into state coffers, accounting for about a third of its budget.
When times are tougher than expected, citizens get larger refunds and the state budget can seem leaky.
Such is the case for West Virginia this year: The state paid more than $45 million in tax refunds in March, compared to a little less than $29 million during the same month last year.
That certainly doesn't help when the state is already looking at a nearly $50 million revenue shortfall for the current budget year, according to a report released Monday.
After judging last year's tax refund payments, the state expected to hand out about $32 million this year.
"We were looking for an increase of about 10 percent. What we got was a 57 to 58 percent increase," said Mark Muchow, deputy revenue secretary for the state.
Muchow attributed the increase to a national trend toward larger tax refunds but also to struggles in the energy sector.
Last budget year the state paid $223 million in tax refunds and received $203 million in taxes owed as returns were filed, Muchow said. This year the state already has paid $159 million and received only $91 million.
While the state expects more money to come in from returns filed in April and May, Muchow said the numbers so far dwarf those of the past.
"In early 1990s, we'd probably pay out $50 to $60 million in an entire year," Muchow said.
More people are structuring their income tax payments throughout the year so that they receive larger refunds, but Muchow explained that many more businesses are structured so that their taxes are paid at an individual income tax level.
Called a "pass-through" structure, Muchow said it was far less common and more complicated to set up in the past.