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WV budget deficit grows to $198M as April revenue collection plummets

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West Virginia’s April revenue collection, as expected, plummeted in light of the coronavirus pandemic-driven economic shutdown, falling $192.27 million short of estimates for the month, according to data compiled by the Senate Finance Committee.

Overall revenue collection of $388.53 million amounted to only 67% of the $580.8 million in collection anticipated for the month.

“We have our revenue numbers. They’re terrible. We expected them to be terrible,” Gov. Jim Justice said Friday during the daily state COVID-19 briefing.

A key culprit was income tax collection, with Justice’s executive order pushing the traditional April 15 income tax return filing deadline to July 15.

April income tax collection of $206.77 million amounted to 61% of the $339.3 million the state expected to collect, a shortfall of $132.5 million.

Sales taxes, the other key pillar of state revenue collection, fared better, at $92.7 million, an amount that missed estimates by $8.8 million.

However, sales taxes are remitted to the state in the month after they are collected, meaning the April figures represent March transactions — a month when the first business closures were ordered on March 18 and when the statewide stay-at-home order went into effect on March 24.

The April collection caused the year-to-date state budget shortfall to grow from $6.4 million in March to $198.7 million, with two months remaining in the 2019-20 budget year.

Justice, who previously has said the economic slowdown could leave the state with a shortfall in excess of $350 million, said Friday that, in a worst-case scenario where the slowdown extends through the first quarter of the 2020-21 budget year — July through September — the projected revenue shortfall could reach $700 million, which he said would be a “bankruptcy situation.”

However, he said he is optimistic that West Virginia will get permission from the federal government to backfill the budget shortfalls.

“We’re not a state that’s upside down on their pensions, like you see on TV,” he said. “All we’re asking to do is backfill the cause and effect of this pandemic.”

As for persuading federal officials to change guidance that forbids states and localities from using federal stimulus money to fill budget shortfalls, Justice said, “I’ve surely, surely got some ‘Inside Baseball.’ I feel like, but I don’t know, that we’re going to be OK.”

The governor said he has hope that the U.S. Treasury will change guidance prohibiting states from using federal CARES Act stimulus funds to cover budget shortfalls, despite statements from President Donald Trump and Senate Majority Leader Mitch McConnell, R-Ky., opposing using federal funds to “bailout” states.

To date, West Virginia has received $1.2 billion in federal stimulus money, none of which has been expended yet, Justice said.

Despite the plunge in revenue collection for April, Justice said he is confident the state will have enough funds to pay expenditures through May and into early June without federal money or tapping into Rainy Day funds.

If it becomes clear that West Virginia will need to tap into its Rainy Day funds even for a short-term bridge, Justice said, he will not hesitate to call the Legislature into special session to make those transfers.

“You’re daggum right we’ll have them back,” he said. “That’s all there is to it.”

Currently, the state’s two Rainy Day funds total $815.55 million — equal to about 18% of the 2020-21 general revenue budget.

Meanwhile, the downturn in global demand for energy was reflected in the April severance tax collection on coal, natural gas and oil, which recorded its worst month in recent history, bringing in $10.3 million, or only 40% of the $25.74 million projected.

By comparison, severance taxes brought in $46.4 million last April — 4.5 times as much as the current month.

Meanwhile, taxes on liquor and beer exceeded estimates in April, with liquor taxes of $2.008 million slightly above estimates and beer taxes of $860,000 eclipsing estimates by 43%. The same can’t be said for tobacco taxes, where collection of $11.02 million for the month was 21% below the estimated $14 million in revenue.

Also during the COVID-19 briefing:

  • Two items expected to be on the Friday briefing agenda, specific guidance for easing stay-at-home orders in the state’s 11 “hot spot” counties and a summary of testing at all nursing homes, will be released over the weekend and on Monday, respectively.
  • DHHR Secretary Bill Crouch offered this advice: “The safest thing West Virginians can do is assume this virus is not going away. It will be here in the fall.”

That was after Justice had commented that sunny, warmer weather “supposedly is going to help us with the virus.”

Reach Phil Kabler at

philk@wvgazettemail.com, 304-348-1220

or follow @PhilKabler on Twitter.

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