MORGANTOWN — In the midst of COVID-19, West Virginia saw all-time-high consumer sales tax and personal income tax revenue during the first quarter of Fiscal Year 2021, Gov. Jim Justice announced Thursday morning.
“This is great news West Virginia, what a day,” he said.
Justice and Revenue Secretary Dave Hardy provided a revenue update for the month and the quarter ending Sept. 30.
Dealing with the economic impacts of COVID has been an “absolute mega-stress issue” Justice opened. People have been unemployed and otherwise suffering financially. “There’s many, many, many hoops you’ve got to jump through.”
Despite COVID, Justice reported, September ended with a $10 million surplus above budget. The quarter, which began July 1, ended with a total $90.4 million surplus – 12.8% above FY 20.
Hardy said consumer sales tax, which makes up about 30% of the state budget, came in at $351 million for the first quarter. Personal income tax collections, about 45% of the budget, were $614 million.
Corporate net income tax also fared above expectations, Hardy said. That figure was $106 million – $43.3 million above estimates.
The state’s general revenue cash flow is another bright spot, Justice said, with $297.8 million excess funds, compared to $120.1 million for the same quarter in FY 20, with no pandemic affecting the economy. “That is the very best it has been since 2009.”
Hardy noted that the 2009 cash flow was boosted by exceptionally high severance tax income. “This number is just out-of-this-world good.”
Wall Street has been impressed with West Virginia’s performance, Hardy said. In a new report, Standards & Poors praised the state’s financial management policies and noted its ability to handle any near-term fiscal pressures that may arise.
“The state’s finances are in excellent condition today,” he said.
Justice pointed out that West Virginia has moved from an economy dependent mostly on severance taxes to one that now sees tourism and tech dollars and other revenue contributing. Truly today we are a much more diversified economy and this state is rocking.”
In fact, severance taxes make up the smallest share of the state’s economy than they have in the past 20-25 years, Justice said. They totaled just $18.6 million for the month, $22.6 million for the quarter. That was $5.8 million above estimate but the estimate was really low.
“Our severance is surely down and down bad,” Justice said. He hopes it will rise. “But it’s not good.”
Justice fielded a question on whether CARES Act and other federal COVID money played a role in boosting the quarter’s numbers.
He said it’s complex. It seems like on the surface that the government pumping in money stimulates the economy, and that’s partially true. But the state also kept essential businesses running and the money those essential worker spent had a multiplier effect.
He likened COVID’s economic impact nationwide to a cannonball. “We’ve managed all the moving parts with the cannonball.”
He’s repeatedly held out hope for another federal stimulus package, and talks have resumed, so he’s still hoping but less confidently. “Washington is so blooming inept its unbelievable.”
With all the good news, Justice warned against overconfidence. “We can be cautiously optimistic but we don’t know what tomorrow’s going to bring.”
Tweet David Beard@dbeardtdp Email email@example.com