Justice lauds strong revenue collections
After missing revenue estimates for two of the past three months, Gov. Jim Justice came to the state Capitol Thursday to celebrate and perhaps even gloat over strong April tax collections of $604.9 million, which exceeded projections by 10 percent.
“We should absolutely be so proud of what we’ve done ” Justice said of the turnaround in tax collections that moved the state from budget deficits approaching $500 million in 2017 to a current $77 million surplus in less than two years.
“It’s spectacular beyond belief,” said Justice, who said he plans to “glean” some of expected year-end budget surplus to provide additional funding for efforts to repair the state’s crumbling secondary roads.
For obvious reasons, April is always the biggest month of the year for tax collections, and the two key taxes due in the month exceeded expectations.
Personal income tax collections of $333.19 million exceeded estimates by $25.29 million, and corporate net collections of $45.23 million came in $15 million over projections — together accounting for more than $40 million of the $53.6 million surplus in tax collections for the month.
Another key pillar of state tax collections, sales taxes, came in 2.6 percent over estimates in April, at $100.56 million.
Severance taxes, driven primarily by higher natural gas prices, also remained strong, at $46.39 million, exceeding projections by more than $11 million.
With two months remaining in the 2018-19 budget year, overall year-to-date collections of $3,897 billion are 2 percent ahead of estimates, and 11 percent ahead of the same point a year ago.
Deputy Revenue Secretary Mark Muchow said the state economy is in “reasonably good shape moving forward,” despite a softening in coal markets nationally.
“West Virginia is doing better than most states. Most states are seeing a downturn in coal production,” which he attributed to a downturn in prices for thermal coal, used predominately for power generation.
He also said natural gas prices remain strong, driving severance tax collections higher, and that natural gas pipeline construction remains a key in strong construction employment numbers.
While there is no sign of an imminent national recession, Muchow said there is concern about slowdowns in economies in Europe and China.
“The caution is not so much with the United States economy, but the economy of some of our trading partners,” he said.
Justice later disputed one of Muchow’s findings, saying, “I disagree with Mark with the fact that pricing on the thermal side has gone down. Well, bullfeathers.”
Justice said that while thermal coal prices have recently dropped from a high of about $78 a ton to about $63 a ton, two years ago, it was priced at about $35 a ton.
Lawmakers passed this session, and the governor signed into law, legislation phasing down the state’s severance tax on thermal coal from 5 percent to 3 percent, saving coal companies some $60 million a year when fully implemented.
While Justice called on reporters to surprise him, and focus questions on the positive economic news, and not on federal investigations, or other controversies, Justice fielded a wide range of questions, including questions about an ongoing federal investigation of the non-profit charity Justice set up to operate the PGA Tour golf tournament at The Greenbrier.
“At the end of the day, you’ll find I have underestimated significantly the monies I’ve put into Old White Charities,” he said, reiterating claims that he has largely self-funded the tournament.
“At the end of the day, there’s nothing there,” he said of the investigation by the Public Integrity section of the DOJ. Justice also said he has not been interviewed by federal authorities.