CHARLESTON — West Virginia has ended its budget year with a trio of positive signs for state government’s finances, but the recession and other factors overshadow each fiscal indicator.
General tax revenues wrapped up the 12 months Tuesday with a surplus of at least $2.5 million, Deputy Revenue Secretary Mark Muchow estimated Wednesday.
The lottery was also on track to meet and perhaps exceed estimated annual sales of $1.43 billion. While a recent switch to a new computer system has delayed June figures, lottery officials report entering that month nearly half a percent above forecast.
And investments continue to rebound from the Wall Street meltdown, posting gains for at least three consecutive months. May, the latest month for complete figures, saw earning top $509 million for a 6.4 percent return. The value of the state’s investments rose above $9 billion for the first time since September.
But the state’s portfolio still missed the target return rate of 7.5 percent, instead showing losses for the year of nearly $1.6 billion. It hit bottom in February, when the stock market tumult stripped away $2.9 billion of its value, before it began rebounding the following month.
General and lottery revenues, meanwhile, were both down from the prior year. Besides the recession, slot machine casinos in neighboring Pennsylvania are a culprit for the lottery. They compete with video lottery machines hosted at West Virginia’s Northern and Eastern Panhandle racetracks.
Muchow cited the weak economy and its fading energy sector for the decline in general revenue. While June delivered $282.6 million, or $10.6 more than expected, the state missed the budget year’s $3.902 billion forecast by $1.1 million.
But the state has realized a surplus because lawmakers set spending for the just-completed year $3.7 million below that revenue estimate.
“The Legislature decided not to appropriate all of the funds that were available,” Muchow explained. “If we didn’t have the safety cushion there, we would have had to take some other course of action. It was a pretty close shave.”
Muchow said the 2009 fiscal year marks the third time this decade that collections fell below projections. He added that the prior occasions, in 2003 and 2000, required midyear cuts to ensure a balanced budget.
“This time, things were so close, we had enough flexibility so that was not on the table,” Muchow said.
The recession hobbled general revenue’s second-largest source, sales and use taxes. Those brought $1.1 billion, or nearly $71 million less than forecast. It similarly kept corporate net income and business franchise taxes $30.8 million below projections, to $270 million.
But the chief revenue source, personal income taxes, actually beat expectations by 4.5 percent, or $67.5 million. Muchow noted recent national figures that ranked West Virginia sixth among the states for per-capita income growth in 2008.
Severance taxes on coal and other extracted natural resources also did better than expected, as did the cigarette tax and miscellaneous receipts. The latter reflects $19 million in unclaimed and abandoned property deposited by state Treasurer John Perdue, Muchow said.
Mindful of the continuing recession, officials have forecast both general and lottery revenues downward — at $3.78 billion and $1.38 billion, respectively — for the just-started budget year.
West Virginia
Budget year ends on hopeful notes
- West Virginia
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W.Va. texting bill evolves, heads to House
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Lawmakers navigate lobby ban, social media
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Three aging state power plants to close
