CHARLESTON — For a second straight month, West Virginia’s state tax collections for August topped estimates for the month, coming in about $29.89 million higher than projected, a Senate Finance Committee report shows.
However, unlike July, when monthly revenue estimates were lowballed by about $160 million to assure a revenue surplus to open the 2021-22 budget year, the $353.55 estimate for August was about $22 million higher than August 2020 revenue collections.
For the month, the state took in $383.45 million, about $47.78 million more than the $305.8 million collected during the lowballed month of July.
One of the two main pillars of state tax collections, sales taxes, rebounded after missing estimates in July, with $141.17 million of collections exceeding projections by $12.87 million.
July sales taxes of $89.78 million fell $4.7 million below lowballed estimates.
Since sales taxes are remitted to the state the month after they are collected, August taxes represent July transactions, a month when consumer spending improved nationally as the COVID-19 pandemic appeared to be waning.
Income taxes and severance taxes also exceeded estimates for August, at $154.5 million and $45.91 million, respectively, likely both benefiting from a spike in coal prices.
According to a CNBC report, soaring global demand for electricity and surging natural gas prices triggered the rally in thermal coal prices. It notes that economists and energy analysts believe the surge will be short-lived, with prices normalizing later this year.
Gov. Jim Justice touted August revenue collections during the state COVID-19 briefing Wednesday, saying, “The state is doing really wonderful. We’re really on rock-solid ground.”
He also referenced the upturn in severance tax collections, lamenting that the Legislature has failed on several occasions to pass his proposal to have tiered rates of severance taxes tied to coal and natural gas market prices.
“When things are good, they could throw a little extra in the collection plate,” he said.
Some tax categories underperformed in August, including tobacco taxes, with $14.48 million of collections, missing estimates by about $900,000; and corporate net taxes of $2.61 million, down $8.4 million from July.