(Graphic illustration/MetroCreative)
HUNTINGTON – Excess tax revenue in West Virginia is likely to exceed the $1.7 billion revenue surplus estimate set for the end of the current fiscal year at the end of May, a month early. Members of the Joint Standing Committee on Finance received a briefing Monday morning from Dave Hardy, secretary of the West Virginia Department of Finance, during the May Day interim meetings at Marshall University in Huntington. According to Hardy, the tax revenue surplus for the 2023 fiscal year that ends June 30 is $1.617 billion as of Friday. West Virginia ended April with a $1.585 billion surplus in tax revenue with just two months left in the current fiscal year.
“Everything is pretty much on target,” Hardy said. “We started saying last fall that we would have a $1.7 billion surplus… I was skeptical, but as of this morning the surplus number as of May 5, last Friday, is $1.617 billion” .
West Virginia collected $5.427 billion in tax revenue in the first 10 months of the fiscal year at the end of April, which was 41.3 percent higher than the Department of Revenue’s estimate of $3.842 billion. ‘Treasury. The April personal income tax filing deadline drove much of the tax revenue collection last month, with April tax revenue of $825.9 million, or 62 .9% higher than the revenue estimate of $506.9 million, bringing in $319 million in excess tax revenue for the month and breaking records. for the largest monthly tax collection in state history. Personal income tax revenue in April was $472.6 million, 68.9% higher than the revenue estimate of $279.8 million, which was a surplus of $192.8 million for the month. Personal income tax revenue of $2.278 billion was 23.9% higher than the revenue estimate of $1.838 billion for a surplus of $439.5 million. Hardy said personal income tax collections at the end of April were up 9% from collections at the same time 12 months ago. Hardy told lawmakers they are still monitoring the effects of the 21.25 percent general personal income tax that went into effect in March after House Bill 2526 passed. The personal income tax cut, which is retroactive to Jan. 1, is estimated to return roughly $590 million to taxpayers. Hardy said most of the effects will be seen in the 2024 fiscal year starting July 1.
“When you change the state’s finances, it’s like converting an aircraft carrier. It’s very slow,” Hardy said. “Right now, we’re watching and monitoring the effect of the lower income tax rates. We see that effect through the new withholding tables and the fact that people are starting and will be adjusting their estimated payments from the “income tax”.
Mark Muchow, assistant secretary of the Department of the Treasury, said an updated estimate of tax revenue for fiscal year 2024 will be released later this summer, reflecting changes in income tax collections staff Typically intended to estimate actual tax revenue, estimates in recent years have been tied to previous general revenue budgets that have remained relatively flat.
“The official estimates set by the governor in the past two years have been based on the budget, not actual revenue performance.” Muchow said. “Sometime up until July 1st we should get an official advised estimate for fiscal year 2024 to reflect the changes, but the bottom line will remain the same … but we’ll be reconfiguring the numbers a bit. The estimates of the income tax will go down a little bit, but the sales tax will go up. There will be other changes in the mix for the next fiscal year.”
As a result, official revenue estimates remain low, while state revenue officials expect actual revenues to be much higher than estimates, creating the illusion of tax revenue surpluses. For example, the Legislature passed a bill in March that set the general revenue budget for fiscal year 2024 at $4.875 billion. But according to Treasury Department projections released in January, officials expect the state to end fiscal year 2024 with $6.1 billion in general revenue collections for a $1.2 billion surplus. Hardy said overall tax revenue is up more than 14 percent from the same time 12 months ago, and interest income from short-term savings in various state accounts has brought in an extra $100 million this fiscal year compared to last year when the state had losses. .
“This isn’t arguing anything but just math,” Hardy said. “Because of a lot of things that happened in the bond market, this year interest income is up over $100 million. That’s the effect of the markets coming back, the federal government raising interest rates. We’re seeing a lot more revenue with our money in the short term.”
Steven Allen Adams can be reached at sadams@newsandsentinel.com.
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