CHARLESTON, WV (WOAY) – With the twelfth and final month of Fiscal Year 2019 now in the books, Gov. Jim Justice announced today that general revenue growth of $511 million for the year marked the greatest single-year revenue growth total in West Virginia history.
For perspective, the $511 million in revenue growth for FY2019 alone is more than one-and-a-half times the combined revenue growth in West Virginia for the entire decade from FY2007 to FY2017.
“Our revenue numbers this year have been so special, it’s unbelievable,” Gov. Justice said. “We set a record almost every single month, and to see it all pay off with an all-time state record for revenue growth is so exciting for our people and our future. I’m incredibly proud and so happy for every single West Virginian.”
Total collections for the historic revenue year came in at $4.756 billion – 12 percent ahead of prior year receipts.
“To think where we were when I came in the door – bankrupt – after special sessions trying to determine how much to cut and how many more people to run out of West Virginia. We had budget crisis after budget crisis every summer. It just shows that my plan to bring our economy back to life is truly working, even beyond everyone’s wildest dreams,” Gov. Justice said. “It’s so much better to be celebrating this great news, but there are still West Virginia families hurting. I’m not going to stop until we help every last one of them.
“We’re working hard to make life better for all of our hard-working people,” Gov. Justice continued. “We’re bringing in more money and better jobs every day so our people can have an opportunity to build a great life for their family and live in paradise.”
June General Revenue Fund collections, including funds that were eventually transferred to the income tax reserve fund, initially came in at a $3.1 million surplus before a $12 million transfer. Total monthly collections were 15 percent above prior year receipts.
“This is a great day for West Virginia. Record-breaking revenue numbers such as these reflect an overall improvement in nearly all sectors of the state’s economy,” West Virginia Department of Revenue Secretary Dave Hardy said. “This reflects robust and continued growth in virtually all of our revenue sources, including consumer sales, personal income, corporate net income and severance taxes.”
Growth in West Virginia, in recent years, goes far beyond revenue and onto the national stage.
In 2017, West Virginia was the number one state in the nation for construction job growth rate, at 14.4 percent. That year, the state added 4,300 jobs in construction alone.
>From 2018 to 2019, West Virginia’s general revenue growth rate has grown to one of the best in the country. According to the National Association of State Budget Officers, only five states in the nation reached double-digit revenue growth as of April 2019, with West Virginia’s 11.5 percent ranking second in the United States.
And now, 2019 has brought West Virginia to the top of the nation for income growth rate. The historic FY2019 revenue numbers come one week after United States Secretary of Commerce Wilbur Ross announced that West Virginia was the #1 state in the nation for personal income growth in the 1st Quarter of 2019, with a 5.6 percent growth rate.
“Congratulations to #WestVirginia and @WVGovernor Justice for having the highest Q1 personal income growth (5.6%) in the country with the 2nd highest earnings increase, but also the 4th lowest increase in government benefits income in the nation.”
“I’ve said over and over, the people of West Virginia will not tolerate being dead last anymore,” Gov. Justice said. “We still have a lot of people to help and we will absolutely do that. But we’re getting there and today is a day to celebrate all of the good that we have going on in our growing economy.”
The following is a summary of June 2019 and total Fiscal Year 2019 revenue collections:
General Revenue Fund
June General Revenue Fund collections, including special revenue fund transfers, were more than 15% above prior year receipts. These numbers reflected strong income withholding tax payments, corporate income tax payments and severance tax payments. In addition to General Revenue Fund deposits, $12 million was added to the Income Tax Refund Reserve Account in June in comparison with a $6 million deposit in the prior year. Following such transfers, net June General Revenue Fund collections of nearly $478 million were 13.9% ahead of last year.
Total Fiscal Year 2019 collections of more than $4.756 billion were nearly $8.2 million above the FY 2019 annual estimate (as revised upward by a cumulative $308.238 million) and 12% ahead of prior year receipts. The sharp rise in collections was attributable to very high rates of growth in Severance Tax, Corporation Net Income Tax, Consumer Sales Tax and Personal Income Tax collections. General Fund Severance Tax collections were 33.7% ($116.5 million) ahead of last year. Corporation Net Income Tax collections were nearly 80% ($88 million) ahead of last year. General Fund Consumer Sales Tax collections were 9.9% ($123 million) ahead of last year. General Revenue Fund Personal Income Tax collections were 9.2% ($177.2 million) ahead of last year. Cumulative General Revenue Fund collections were roughly $316 million ahead of original estimates for the year and more than $511 million ahead of prior year receipts.
A summary of major components follows:
Total June Personal Income Tax collections were 12.5% above prior year receipts. Cumulative collections were more than 9.3% ahead of prior year receipts. General revenue fund income tax collections, net of special revenue fund transfers, were 9.6% ahead of last year in June and 9.2% ahead of last year for the full year. The sharp increase in monthly net revenue from the prior year was partially due to a 13.6% increase in monthly wage and salary withholding tax payments. Cumulative withholding tax collections of more than $1.72 billion were nearly 10% above prior year receipts. Withholding tax collections previously grew by 9.1% during the final three months of FY2018. Increased employment, especially in the construction sector, and higher wages were the contributing factors to the gains. Personal Income Tax collections also benefited from increased income realizations in response to significantly lower federal corporate income tax rates and associated higher dividends.
Corporation Net Income Tax collections of $36.5 million were more than double prior year receipts in June. Cumulative collections of $198 million were roughly 80% ahead of prior year receipts. Taxpayers were motivated to maximize their business deductions in the year prior to the implementation of federal tax reform (i.e., TY2017) and to defer income realizations until after the new lower tax rates first took effect. The result was a greater level of reportable taxable income in TY2018 and higher tax yield as reflected in return payments received in recent months.
June Consumer Sales and Use Tax collections of more than $151.2 million were more than $2.1 million above the revised estimate and 5.2% above prior year receipts. Cumulative collections were roughly $2 million above the revised estimate and nearly 10% ahead of prior year receipts. Strong income growth and enhanced construction industry activities were the major contributing factors to the recent surge in sales tax revenue growth.
General Revenue Fund Severance Tax collections of nearly $51.9 million were $9.8 million above estimate and 46.6% ahead of prior year receipts in June. Total FY 2019 General Revenue Fund Severance Tax collections were more than $11.4 million above the revised estimate and 33.7% ahead of prior year collections. Total cumulative Severance Tax collections for all funds were up by 30.7%. Recent strong growth in collections was partially attributable higher oil and natural gas prices and greater sales of natural gas and natural gas liquids. In addition, coal exports were significantly higher during the first half of this fiscal year.
FY 2019 Insurance Premium Tax collections totaled $129.1 million, an amount that was $0.6 million above the revised estimate and 3.9% ahead of prior year receipts.
FY 2019 Business and Occupation Tax collections totaled $124.5 million, an amount that was 8.3% ahead of prior year receipts.
FY 2019 Tobacco Products Tax collections of $171.2 million were nearly $8.5 million below estimate and 3.7% below prior year receipts.
State Road Fund
In June, total State Road Fund collections of $198.8 million were nearly $9.1 million below the revised estimate, but 130.5% above prior year receipts. June collections included more than $104 million in General Revenue Fund appropriations to the Road Fund for secondary road repairs. Cumulative collections of nearly $1.34 billion were $71.3 million below the revised estimate and 8.0% above prior year receipts. The FY 2019 shortfall was attributable to a relatively high estimate for federal fund reimbursements. Even though the actual reimbursements were below the estimate, the State is fully capturing all available federal reimbursement funds. Cumulative federal reimbursements of $366.9 million were 6.2% lower than last year.
State Road Fund collections attributable to State revenue sources totaled nearly $172.2 million in June and $972.7 million for the year. FY 2019 collections were $33.2 million above estimate and 14.5% ahead of prior year receipts. Cumulative Motor Fuel Excise Tax collections of $443.4 million were $0.5 million below estimate and 5.7% ahead of prior year receipts. Cumulative License and Registration Fee collections of $168.8 million were $26.6 million above estimate and 13.6% ahead of prior year receipts. Cumulative Motor Vehicle Sales Tax collections totaled $236.1 million. Cumulative collections were $5.2 million above estimate and 3.8% ahead of prior year receipts.