CHARLESTON — West Virginia closed out the 2020-21 budget year in the black on Wednesday, a year that featured the infusion of billions of dollars of federal pandemic stimulus funds and an unprecedented two income tax filing deadlines in the same fiscal year.
June overall tax collections of $497.58 million — $25.78 million above estimates — pushed total state revenue collections for the 2020-21 budget year to $4.989 billion, giving the state a year-end budget surplus of $415.34 million.
However, $119 million of that surplus is the result of reducing revenue estimates for the year, projecting that state tax collections would be that much lower compared to 2019-20 revenue projections.
“We’re in great shape in West Virginia,” Gov. Jim Justice said, announcing the revenue figures Thursday.
Justice has twice called legislators into special session this summer to appropriate nearly $400 million of the budget surplus.
Since by law, half of any year-end budget surplus must go into the state’s Rainy Day emergency reserve funds, the roughly $9 million transfer pushed the total value of those funds over the $1 billion mark.
Additionally, a special session bill passed last week transferred $50 million of budget surplus to the Rainy Day fund to pay expenses at the start of the new budget year before 2021-22 tax collections start rolling in.
June revenue collections exceeded projections even though personal income tax collections fell 23% below estimates, coming in at $156.27 million. Estimated collections for the month were $202.8 million.
The other major source of state tax collections, sales taxes, came in $22.95 million over projections at $175.75 million.
Since sales taxes are remitted to the state a month after they are collected, the June revenue represents sales activity in May, when many West Virginians were receiving their $1,400 federal stimulus checks under the American Rescue Plan.
Throughout the pandemic, Justice has downplayed the impact of federal stimulus funds on the state economy. However, in a report to the Legislature, Deputy Revenue Secretary Mark Muchow placed that impact at $5.99 billion, and that was prior to passage of the American Rescue Plan in March, which will inject more than $2 billion into the state economy.
Fiscal 2020-21 revenue collections also benefited from the rarity of having two income tax filing deadlines in the same budget year.
Tax Day 2020 was pushed back from April 15 to July 15 because of the pandemic, shifting those tax collections into the 2020-21 budget year. Fiscal 2020-21 then saw a second Tax Day on May 17, again pushed back from the traditional April 15 filing deadline.
Also Thursday, Justice noted severance tax collections, after lagging 50% below estimates as recently as January, had actually finished the budget year $23 million above estimates, at $274.25 million.
Justice did not mention that was the result of a recent surge in natural gas prices, up more than 50% over 2020, or that the state’s 2020-21 revenue estimate for severance taxes of $250.95 million amounts to a nearly $126 million reduction from 2019-20 estimates.
As he has done in the past, Justice on Thursday touted the state’s declining severance tax collections as evidence that the state economy is diversified.
June overall tax collections of $497.58 million were actually down $8.65 million from June 2020, when the state collected $506.23 million in taxes.