With one month left in the fiscal year, West Virginia’s revenue collection is still more than $236 million below estimates, according to the Justice administration.
For the month of May, revenue collection was nearly $38 million short of estimates, but Gov. Jim Justice said the situation could be much worse, considering economic conditions spurred by the COVID-19 pandemic and resulting lockdown.
“If we didn’t have a pandemic in April, May, June, we’d be past our estimates and absolutely end up in a surplus in a year that, if you’ll remember, we thought we’d have to make [budget cuts],” Justice said.
Most businesses in the state were shut down or operating in limited capacities in April because of the pandemic, Justice said. According to estimates from the Senate Committee on Finance, April was expected to bring in more money than any other month this fiscal year — nearly $581 million. The state collected only 67 percent of that estimate, or $389 million, the largest monthly shortfall recorded this fiscal year.
State income taxes, usually collected on April 15, were postponed until July, contributing to the deficit, Justice said. Now, when that money is collected, it will be used to help the state at the beginning of FY2021.
“That’s going to get us off and going into 2021, and it’s going to be terrific,” Justice said. “We’re going to get through 2020 — and 2020 is going to be OK — [and] start off with a jump start [next fiscal year] that is in a real positive way.”
The West Virginia Constitution requires the government to close out each fiscal year with a balanced budget. While Justice said he’s confident the state will be “economically OK” at the end of June, there is no guarantee the federal government will release guidelines to allow money received from the CARES Act to backfill the budget — something Justice has been waiting on for several weeks.
“From that money, we’ll have significant dollars that will flow to the cities and counties. I’m very, very hopeful we’ll have some dollars we can play with and help out our small businesses, but we’ve got to help out the mothership, and the mothership is the state,” Justice said.
Asked Tuesday what the state would do if federal guidelines are not changed and there is a shortfall, Justice said he didn’t know how to answer but that there was “a rock-solid plan that we are going to be cash-positive on June 30.”
He also said Tuesday he sees no reason to call the Legislature into a special session to approve the use of Rainy Day reserve funds for the deficit.
So far this fiscal year, severance tax collection holds the highest shortfall, with only $248 million, or 69%, of the estimated $323 million collected.
For personal income taxes, $1.768 billion — 82% — of the estimated $1.945 billion has been collected, and for consumer sales and service taxes $1.225 billion — 88% — of the estimated $1.240 billion has been collected.