October tax receipts build pressure for tax reform in West Virginia | News, Sports, Jobs
CHARLESTON — Another month of tax revenue surpluses leaves West Virginia with more than half a billion dollars four months into the new fiscal year, as Gov. Jim Justice and Republican lawmakers in the state stand are struggling to figure out how best to use these surpluses to provide tax relief.
According to data released Tuesday morning by the state Senate Finance Committee, West Virginia ended the first four months of fiscal 2023 — July, August, September and October — with more than $2 billion in tax revenue for the general revenue fund.
That’s 39.8% more than the state Department of Revenue’s estimate of $1.4 billion, leaving the state with $574.8 million in excess tax revenue. Tax recoveries for the first third of the fiscal year also exceeded tax recoveries for the same period of fiscal 2022 – $1.6 billion – by 28.2%
October tax receipts of $492.6 million beat the revenue estimate of $344.8 million by 42.9% for a surplus of $147.8 million for the month. They also topped October 2021’s $381.8 million in tax revenue by 29%.
Tax revenues are boosted by a healthy start-up tax fund and higher prices for coal, oil and natural gas. October severance tax collections of $69.1 million were 475.7% higher than the revenue estimate of $12 million for a surplus of $57.1 million for the month. Year-to-date departure tax collections of $341.2 million were 474.5% higher than the estimate of $59.4 million for a surplus of $281.8 million since the beginning of the year, i.e. almost 50% of the total surplus since the beginning of the year.
The other main sources of government tax revenue all also recorded surpluses. October personal income tax collections of $215.1 million were 26.5% above the estimate of $170.1 million for a surplus of $45 million for the month. Year-to-date personal income tax collections of $823.3 million were 17.1% above the estimate of $703.2 million for a surplus of $120.1 millions of dollars.
October consumer sales and use tax collections of $123.5 million were 20.7% higher than the estimate of $102.3 million for a surplus of $21.2 million . Year-to-date sales tax collections of $518.3 million were 15.8% above the estimate of $447.6 million for a surplus of $70.7 million. Net corporate income tax receipts for October of $19.1 million were 282.9% higher than the $5 million estimate for a surplus of $14.1 million. Year-to-date collections of $122.1 million were 139.3% higher than the $51 million estimate for a surplus of $71.1 million.
West Virginia ended fiscal 2022 at the end of June with more than $1.3 billion in excess tax revenue, with more than $400 million still unrestricted and collecting interest. Current tax collections are on track to meet or exceed this record surplus by the end of fiscal year 2023 next June. That knowledge is causing a growing divide between the judiciary and Republican lawmakers over whether to use those tax surpluses to phase out personal income taxes or use those funds to fill counties. and school systems by eliminating corporeal property taxes.
Since 2020, Justice has pushed for the phasing out of personal income tax and called for a 10% reduction in personal income tax rates over the summer in a special session of the Legislative Assembly. The House of Delegates supported the Justice tax cut bill, but the State Senate never retained the bill. Personal income tax collections in fiscal year 2022 accounted for more than 42% of the $5.9 billion in general fund tax revenue.
“We could do a 10% (personal income) tax cut tomorrow,” Justice said during a Tuesday morning visit to the Raleigh County Commission. “We can put $254 million back in your hands tomorrow…we need to get on the road to eliminating our personal income tax. When we make this move, whether it’s 10% or 20% at the start or whatever, it will send signals to the whole world.
Since then, attention has turned to Amendment 2, one of four constitutional amendments voters are considering as early voting continues through Saturday, November 5, and as Election Day approaches on Tuesday, November 8. If approved by voters, Amendment 2 would amend the state Constitution to give lawmakers the power to exempt six classes of taxes on tangible personal property, including machinery and equipment, inventory and motor vehicles.
Justice pushed the state to rally voters to oppose Amendment 2 despite including the elimination of property taxes on machinery/equipment and inventory in its annual proposals to the Legislature in 2018 and 2019. Justice plans to reintroduce its 10% personal income tax plan. again in the 2023 legislative session, which would net taxpayers more than $254 million.
Only a small minority of Republican lawmakers voted against Amendment 2, with both Senate Speaker Craig Blair, R-Berkeley, and House Speaker Roger Hanshaw, R-Clay both staunch supporters of Amendment 2. Amendment 2. If Amendment 2 is approved by voters, the Legislative Assembly is likely to debate several proposed tax exemptions on tangible personal property.
According to previous studies by the nonpartisan Tax Foundation, corporeal property taxes accounted for almost one-third of total property taxes collected by counties. According to the West Virginia Association of Counties, which strongly opposes Amendment 2, the county’s total real dollar tax assessments for the 2021 tax year were more than $515 million for the 55 counties combined, although it is unclear how much the 55 counties collect.
The Republican Senate leadership under Blair and Senate Finance Committee Chairman Eric Tarr, R-Putnam, want to fund all 55 counties at their actual dollar assessments and provide counties with a minimum of an additional $1 million above- Above their formula-based assessments, funding counties directly through the general revenue fund.
Blair said in a statement Tuesday that by maintaining a fixed budget since fiscal year 2018, combined with natural growth in tax revenue, they can provide $558 million in funding to county governments and school systems each year at the ‘coming. Blair pointed to the $574.8 million surplus the state has collected so far in the new fiscal year and the more than $400 million remaining surplus from the previous fiscal year as evidence that the state can afford to eliminate corporeal property taxes and keep counties and schools. together.
“The surplus numbers tell the story: Now is the time to give West Virginia families a tax cut,” he added. Blair said. “With another month of above-estimated revenue, we continue to build a reserve that can be used to ensure our counties remain whole while we provide needed tax relief to families and small and medium businesses.”
A bill drafted by the Senate Finance Committee would also include a 10% personal income tax. The combined proposed tax relief for West Virginians would approach $800 million if passed by lawmakers next year.