State tax collections failed to meet revenue estimates in August, as severance tax collections continued to slump, according to figures released Tuesday by the Senate Finance Committee.
For the month, the state took in $336.15 million in revenue collections, missing estimates by $16.85 million, or 4.8 percent — the third consecutive month revenues missed the mark.
August revenue also fell from August 2018 collections of $352.28 million, a drop of $16.13 million, or 4.6 percent.
Declining severance tax collections were the prime culprit, with $28.83 million of tax collections falling $11.9 million below estimates, a 29.3 percent shortfall. That’s also $21.3 million, or 42.5 percent, below August 2018 severance tax collections of $50.13 million.
For the first two months of the 2019-2020 budget year, severance tax collections are running $26.8 million below estimates, according to the Senate report.
Last week at the West Virginia Chamber of Commerce’s Business Summit at The Greenbrier resort, Gov. Jim Justice warned attendees that August revenue collections might not meet expectations.
“Our July numbers didn’t come in very good, and August is going to maybe be halfway okay, but we’re still struggling,” Justice said, blaming the weak figures on downturns in coal and natural gas markets.
For the first two months of the budget year, total revenue collections of $620.83 million are $49.82 million behind estimates, running 7.4 percent behind, according to the Senate report.
“This current trend puts the state not on track for meeting yearly revenue estimates,” the Senate report notes.
At this point in the 2018-19 budget year, the state had collected a total of $665.88 million in revenue, or $45.05 million (7.25 percent) more than the current year.
Of the two main pillars of state revenue, personal income tax collections of $141.79 million also missed estimates by $5.11 million, or 3.5 percent. Year-to-date, personal income tax collections are running $21.78 million behind estimates.
Sales tax collections of $123.96 million were a bright spot for the month, exceeding estimates by $3.86 million, or 3 percent.
Sales taxes are remitted to the state a month after they are collected, causing sales taxes to sometimes lag behind other revenue trends.
Year-to-date sales tax collections of $204.46 million are running $3.64 million below estimates.
The Senate report was compiled from revenue reports from the WVOasis computer system, which have not been formally released by the governor’s Budget Office. As part of an apparent ongoing feud between the governor and Senate leaders, the Senate has been preemptively releasing the monthly revenue figures since June.
While the monthly revenue reports traditionally have been released to the media via teleconference calls from the Department of Revenue and Budget Office, Justice on several occasions last year staged press conferences to tout strong revenue months.
Last December, however, Deputy Revenue Secretary Mark Muchow told legislators that more than $4 billion in natural gas pipeline construction projects underway statewide were helping fuel the economic upturn, and warned of a measurable drop in economic activity in the state as those projects wrapped up this year.
“When that comes off, it will be very noticeable,” he said at the time. “There will be a drop-off in personal income taxes and consumer sales taxes.”