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State budget shortfall tops $50 million on weak November tax collections

Last month, Deputy Revenue Secretary Mark Muchow warned West Virginia legislators that state revenue collection wasn’t likely to bounce back during the month: “There are certain months of the year I hate, and one of those months is November.”

Turns out, Muchow was prophetic. The November 2019 revenue collection of $312.05 million was $18.08 million short of the $330.13 million estimate for the month, and was down $21.59 million from November 2018, according to figures from the state auditor and the Budget Office.

That means the revenue shortfall for the 2019-20 budget year has grown to $51.33 million, five months into the fiscal year.

Last month, Muchow blamed the state’s budget woes on a global oversupply of natural gas that is causing gas prices to plunge, and also resulting in plunging prices and lower demand for coal.

“There’s just a flood of natural gas out there. It’s keeping prices low, not only for natural gas, but for the coal industry,” Muchow told the interim Joint Committee on Finance.

That was reflected in November severance tax collection of $25.7 million, which was 15 percent, or $4.8 million, below estimates, and down 41 percent from November 2018 collection of $42.44 million.

The two key pillars of state tax revenue fared better for the month, though.

Personal income tax collection of $136.64 million missed estimates by $2.46 million, but was up about $1 million higher than November 2018. However, those figures were down $12.42 million from October.

Consumer sales tax collection of $126.57 million topped estimates by $3.02 million, and is up about $5.3 million over November 2018. (Sales taxes are remitted to the state in the month after they are collected, so November taxes represent October sales transactions.)

Other taxes that missed estimates in November included the business and occupation tax, which came up $4.1 million short, at $2.04 million. That tax is imposed on utilities, primarily electric power plants.

Also, the tobacco tax collection of $13.2 million missed estimates by $2 million.

Last month, Citigroup financial adviser Paul Creedon told the West Virginia Tobacco Settlement Finance Authority that the rate of decline in cigarette consumption nationally has accelerated rapidly in the past year, likely due to the growing popularity of e-cigarettes and vaping.

Complicating matters, as Muchow pointed out to legislators, was that the last day of November fell on a Saturday, and state offices were closed on Thursday and Friday, meaning that taxes due at the end of the month would get carried over into December.

According to the Auditor’s Office, just over $2 million of tax collection was bumped into December.

In October, Gov. Jim Justice directed state agency heads to identify $100 million of possible spending cuts for the current budget year, in case the initial budget shortfall did not improve.

Last week, at a news conference to tout increases in state employment figures, Justice said he anticipated that November revenue collection would come in $1 million over estimates, and said he remained hopeful the state could avoid spending cuts.

“Hopefully, we’re not going to have to cut anything, but we still want to do the prudent and right thing,” Justice said at the time.

Reach Phil Kabler at

philk@wvgazettemail.com, 304-348-1220

or follow @PhilKabler on Twitter.

Funerals for Saturday, December 14, 2019

Akers, Trela - 1 p.m., Tyree Funeral Home, Mount Hope.

Cochran, Jacob - 3 p.m., Gatens-Harding Funeral Home, Poca.

Cosby-Matthews, Hattie - Noon, First Baptist Church of Charleston, Charleston.

DeMarino, Jane - 1 p.m., John H. Taylor Funeral Home, Spencer.

Gunther, Jewell - 1 p.m., Calvary Baptist Church, Chapmanville.

Hall, Betty - 1 p.m., St. Andrew United Methodist Church, St. Albans.

Holbrook, Linda - 1 p.m., St. Andrew Presbyterian Church, Pinch.

Johnson Jr., Delbert - 11 a.m., Allen Funeral Home, Hurricane.

King, Edna - Noon, St. Christopher Episcopal Church, Charleston.

Kiser, Kenneth - 6 p.m., Cunningham-Parker-Johnson Funeral Home, Charleston.

Lawrence, Mamie - 2 p.m., O’Dell Funeral Home, Montgomery.

McCutcheon, Alice - 1 p.m., Old Greenbrier Baptist Church, Alderson.

Mills, Melinda - 5 p.m., New Baptist Church, Huntington.

Rannenberg III, Thomas - 2 p.m., Keller Funeral Home, Dunbar.

Ray, Sandra - 1 p.m., Crooked Creek Church of Christ.

Roach, James - 1 p.m., First Baptist Church, Ravenswood.

Tyler, Gloria - Noon, Grace Bible Church, Charleston.

Ulbrich, Sandra - 11 a.m., Handley Funeral Home, Danville.

Williams, Laura - 2 p.m., Stockert-Paletti Funeral Home, Flatwoods.

Wood, Ruby - 11 a.m., Good Shepherd Mortuary, South Charleston.