May was a rare month, of late, where West Virginia revenue collection exceeded estimates - but the positive figures were "very deceiving," fueled primarily through funding transfers, supplemental appropriations and an early transfer of state lottery profits, Revenue Secretary Bob Kiss said Tuesday.
"If you back those numbers out, we would have not met our revenue estimates," Kiss said of the $314.7 million in taxes collected in May.
That amount exceeded estimates by $27.98 million, or nearly 10 percent, but that included $26.7 million in what Kiss called "gap-fill" funding transfers and a lottery transfer of $20.7 million that includes $10.2 million in lottery profits that were expected to be transferred this month.
Year-to-date, lottery transfers are $18.8 million ahead of projections, but as Deputy Revenue Secretary Mark Muchow noted, "All that means is, for June, we will be $18.8 million short."
However, Kiss said the bright spot of the May revenue report is that it appears the state will avoid the worst-case scenario of finishing the budget year on June 30 with a deficit of $464 million.
"We think that is now not likely," he said, "in fact, very unlikely."
With a $90 million mid-year spending cut ordered by Gov. Earl Ray Tomblin in October, combined with gap-fill funding transfers and supplemental appropriations approved in the regular and special legislative sessions, Kiss said West Virginia is on pace to finish fiscal 2015-16 with a balanced budget, or even a small surplus.
"We think we're on track to finish with a balanced budget, and hopefully do a little better than that," he said.
With June being the final month of the 2015-16 budget year, year-to-date, the state has collected a total of $3.64 billion in taxes, down $123.4 million from fiscal 2014-15, and $190 million short of estimates.
Kiss said June will be a critical month for state revenue, with two collection periods for sales taxes and severance taxes, and is a significant month for estimated payments of income taxes.
As Muchow noted, June revenue estimates of $474 million are nearly one-third above May estimates.
Some of the upturn in May was because of timing, officials said. For instance, personal income tax collections of $124.3 million were $27.6 million ahead of estimates for May, but they followed a month where collections came up $44.4 million short.
Muchow said the shift in the due date for filing income tax returns, from the traditional April 15 to April 18, meant a number of income tax payments were processed and recorded in May instead of April.
Sales taxes, the other primary component of state tax revenue, came in at $100.6 million, nearly 10 percent above May 2015, but $7.2 million below estimate.
Severance tax collections, the biggest drag on state revenue, came in at $32.8 million, $8.3 million below estimate, but only down about 0.7 percent from May 2015. Year-to-date severance tax collections of $236.4 million are down 35 percent from the same point in the 2014-15 budget year. However, Muchow said there are signs the global energy market might be beginning to slowly stabilize after a price and production free-fall.
Muchow said coal production fell one-third in the past year, something economists projected, while the plunge in natural gas prices came as a surprise.
"Natural gas prices are down 60 percent from last year," he said, adding, "Coal is actually outperforming gas - it's just a matter of coal prices being more stable than natural gas prices."
Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220, or follow @PhilKabler on Twitter.