November revenue collections $4.1M behind estimate

Staff Report

CHARLESTON, W.VA. – The West Virginia Department of Revenue today released General Revenue Fund collection numbers for November of $295.6 million that were nearly $4.1 million below estimate.

Five months into Fiscal Year 2017, cumulative collections of $1.533 billion were $91.5 million below estimate and just $13.2 million above last year’s receipts. These collections included more than $10.1 million in diverted Workers’ Compensation Debt Fund revenues related to the provisions of Senate Bill 419.

Year-to-date numbers show the hardest hit areas of collections are Personal Income Tax ($43.6 million), Consumer Sales and Service Tax ($36.2 million), Corporation Net Income Tax ($15.3 million) and Severance Tax ($13.5 million).

Major collections of interest in November include:

— Personal Income Tax: Following a 15 percent jump in October, November collections fell by 9.7 percent from the prior year to less than $114.8 million in General Revenue Fund collections. The decline in collections was largely attributable to an 11.5 percent decrease in wage and salary withholding tax collections from the prior year. A significant portion of the decline in withholding tax receipts was likely attributable to timing alteration factors rather than decline in wage incomes.

Year-to-date total General Revenue Fund Personal Income Tax collections were more than $689.8 million. Receipts were nearly $43.6 million below estimate and 2 percent below prior year adjusted receipts. The 2 percent decline rate includes the impact of lower special revenue fund transfers this year (i.e., $10 million year-to-date) in comparison with last year (i.e., $21.2 million year-to-date).

— Consumer Sales Tax: Following a 6.1 percent decrease in October, November collections rose a modest 3 percent above prior year receipts but still fell short of monthly estimate by more than $0.9 million. After discounting gains from higher municipal sales tax collections and special revenue transfers, state sales tax revenue growth was just 0.5 percent for the month. Cumulative adjusted collections were down from prior year receipts by 1.3 percent with most of the decline occurring in July reflecting June sales. The cumulative deficit in General Revenue Fund sales tax collections rose to $36.2 million with more than 61 percent of the shortfall attributable to July collections. Due to an increase in transfers to special revenue funds, cumulative General Revenue Fund sales tax collections were down by 2.9 percent as compared with an overall decline in State sales tax collections of 1.3 percent.

— Severance Tax: Collections totaled $26.6 million for the month, an amount that was slightly above estimate but nearly 22 percent below prior year receipts. Cumulative General Revenue Fund Severance tax collections of nearly $74.5 million were still $13.5 million below estimate following a slow start at the beginning of the fiscal year. Collections also were nearly unchanged from prior year-to-date receipts.

The year-to-date General Revenue Fund severance tax collection deficit is largely attributable to lower than anticipated natural gas prices. After a brief upturn in the spring, West Virginia natural gas well-head prices fell over the summer months to less than $1.00 per million BTU, a level that was just one-third of the average price for Henry Hub and Columbia Gas pipelines. However, in recent weeks the huge price gap has narrowed as the Dominion South price nearly doubled over the past month to $2.22 per million Btu. If recent price increases stick through the next few months, Severance Tax collections will improve over the second half of this fiscal year.

— Corporation Net Income Tax: Collections totaled -0.4 million and cumulative collections totaled more than $32.4 million. November collections were nearly $1.2 million below estimate due to a nearly $0.9 million increase in tax refund payments in comparison with the prior year. Cumulative receipts were $15.3 million below estimate and more than 44 percent below prior year receipts. In addition to the impact of a national corporate profit recession, revenue yield fell due to the impact of significantly lower energy prices on net income.

— Tobacco Product Excise Tax: Collections totaled $16.6 million in November. Monthly collections were nearly $0.1 million above estimate. Cumulative collections of $88.4 million were $5.5 million above estimate and nearly double prior year receipts.

— State Road Fund: Collections of nearly $55 million were $4.4 million above estimate and 9.3 percent below prior year receipts. Cumulative State Road Fund collections of more than $299.5 million were $16.3 million above estimate and 2.3 percent above prior year receipts.

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Staff Report

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