Deputy Revenue Secretary Mark Muchow urged lawmakers to use caution when analyzing West Virginia's increased revenue numbers, during a legislative interim meeting on Monday afternoon.
His presentation noted that a key part of revenue collections being above estimates is linked to the ongoing construction of several natural gas pipelines. Those projects are expected to be completed by the end of 2019, after which, he expects the personal income tax and sales tax revenue to drop off. Fortunately, the Roads to Prosperity program will bring about $500 million a year to the state for as many as six years.
West Virginia's revenue collections exceeded estimates by $18.8 million in November, putting the state at $141 million above estimates through the first five months of the fiscal year. Muchow said the state is on its way to a $200 million surplus by the end of June.
According to Muchow, the severance tax on coal is currently being helped by a strong export market. The price of natural gas has stayed steady this year but that could go down next year due to a surplus of natural gas in the market, a situation that’s expected to continue until the pipelines are in operation. Muchow reiterated that taxes from the extraction industries are up and down.
So far this year, severance tax collections are 34.2 percent above where they were at this time in 2017. Consumer sales tax collections at $121.2 million were $5.8 ahead of estimates and severance tax collections finished November at $42.4 million, $7.8 million ahead of estimates. Personal income tax collections for November were $135.6 million, $7.3 above estimates.