Touting another strong month for West Virginia tax collection, Justice administration officials continued Thursday to downplay the effect of the infusion of nearly $3 billion in federal CARES Act funds into the state economy since April.
While conceding that the funds have had some effect on the economy, Revenue Secretary Dave Hardy said it would be impossible to quantify the impact.
“It would probably take decades to model out the impact,” he said of the funding, which included $1,200 stimulus checks to most adult West Virginians, 12 weeks of enhanced $600-a-week unemployment benefits, the portion of the $1.25 billion allocation to state government that has been spent to date and numerous direct grants.
Gov. Jim Justice noted, “It seems like, on the surface, the [federal] government has plugged in a lot of money, and that’s what’s making your economy grow.”
However, he said, that would be an oversimplification, saying those funds helped businesses large and small keep going in the early months of the coronavirus pandemic, and those businesses have helped generate a strong economy.
For the month of September, the state collected $423.62 million in taxes, exceeding estimates by $10.03 million, and increasing the year-to-date revenue surplus to $90.37 million after the first three months of the 2020-21 budget year.
“I couldn’t be more pleased,” Justice said of the revenue numbers.
However, the September numbers show signs that state tax collection is slowing down. September revenue collection exceeded projections by 2.5%, well down from August, when the collection of $331.4 million exceeded estimates by $35.85 million, or about 12%.
Personal income tax collection — one of the two key pillars of state revenue — came up short in September, with collection of $193.98 million missing estimates by $2.02 million. Income tax collection for the month also was down $12.8 million from September 2019.
Year-to-date income tax collection of $614.48 million is the highest ever for the first quarter of a budget year, Hardy said. However, that amount includes about $190 million in income tax payments collected in the current budget year — after the traditional filing deadline was pushed back from April 15 to July 15.
If that amount is excluded, year-to-date income tax collection is running about $89 million below year-to-date collection at the same point in 2019.
Likewise, the other key metric of state tax collection, sales taxes, exceeded estimates for September, but by less than $1 million. September’s collection of $129.31 million also was down slightly from the August sales tax collection.
Since sales taxes are remitted to the state a month after they are collected, the September collection represents transactions for the first full month since enhanced unemployment benefits expired at the end of July.
Meanwhile, severance tax collection remained dire in September, as continuing low demand for coal and low natural gas prices continued to hit the state coffers hard. The September severance tax collection of $18.57 million fell $5.83 million, or 31%, below estimates.
By comparison, in September 2016 — the last September of Barack Obama’s presidency — the state collected $26.2 million in severance taxes, an amount 41% higher than September 2020.
Justice said state severance tax collection is at a “20- to 25-year low,” to the point where it no longer is a major component of revenue collection.
“We’re not going to forget our miners. We’re not going to forget our gas industry, but truly, truly, we’re a much more diversified economy,” Justice said.
As a notable aside, beer and liquor sales continued to remain high during the pandemic, based on tax collection. Combined, September beer and liquor taxes of $2.73 million exceeded estimates by about $170,000, or about 6.6%, and are up about $80,000 over September 2019.
Justice went on several tangents during the briefing, finding opportunities to take shots at his gubernatorial opponent, Ben Salango, saying, “He’s so far behind in the polls, he’s been lapped,” to denounce supposed efforts to defund the police, and to recognize military veterans by saying, “Our ability to be able to go to Wendy’s, our freedoms, our ability to be here today is due to the sacrifices that all these good people have done.”