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Governor proposes FY 2022 state budget essentially unchanged from current pandemic budget

MORGANTOWN – After a pandemic lasting more than a year, West Virginia will enter Fiscal Year 2022 with a budget essentially the same as this year’s, Gov. Jim Justice’s budget team told reporters Wednesday afternoon.

The budget for FY 2021, which runs through June 30, is $4.574 billion. FY 2022’s numbers – officially announced by Justice during his State of the State Address Wednesday evening – will be a hair lower, at $4.569 billion.

“No question we’ve been in extraordinary times,” Revenue Secretary Dave Hardy said during the press briefing. The pandemic triggered a statewide shutdown March 17.

Deputy Revenue Secretary Mark Muchow said that led to a sharp recession in March and April followed by a nearly as sharp recovery starting in May. Federal stimulus packages and low interest rates helped keep the state economy stable through the tumult.

For FY 2022, Hardy said, Justice instructed his team to keep expenses flat and told agencies to stay within their current budgets.

This year’s budget is about $123 million ahead of last year’s collections through January. Collections in several areas are down, including business and occupation taxes and severance taxes. But others are up, including consumer sales, corporate and personal income.

Personal income tax revenues were boosted, Muchow said, by the delay of the tax date from April 15 to July 1. That put income tax collections $61.4 million above projections and $123.3 million above FY 2020 collections. The estimate year to date was $1.258 billion; the actual was $1.319 billion.

The pandemic has led to more smoking, Muchow noted, so year-to-date tobacco tax revenues are up by $1.68 million: a total $100.34 million compared to last year’s $98.7 million.

For FY 2022, the slight drop from $4.574 billion to $4.569 billion is a difference of just $4.9 million.

Personal income tax revenues are expected to be about $114.35 million lower than this year’s: $2.041 billion compared to $2.156 billion. Sales taxes should rise from $1.422 billion to $1.474 billion – a $52 million increase.

Severance taxes are expected to increase as gas prices rise and coal sales pick up somewhat: from $250.9 million to $319.7 million.

Corporate income tax revenue should rise, from $144.5 million to $160.3 million. But B&O revenues are expected to decline, from $126.9 million to $111 million.

People are traveling less, Muchow noted, so year-to-date fuel tax revenues are down by $48.2 million compared to FY 2020: $228.1 million compared to $276.3 million compared to last year.

Justice has proposed and the Legislature is considering ways to phase out the personal income tax. Asked about that, Hardy and Muchow said since it’s still in the talking phase and nothing has been passed, it can’t be included in the current budget numbers.

When something is passed, Muchow said, “That’s a new deck of cards.”

No state employee pay raises are on the table, they said. However, certain state salaries are set in code and haven’t been raised since 2009. Last year, the Legislature gave the governor the power to propose changes, and that’s in discussion.

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