Charleston, W.Va. (WVDN) – Governor Patrick Morrisey announced that final Fiscal Year 2025 General Revenue Fund Cumulative collections totaled $5.519 billion. Collections for the year were $254.8 million above estimate and 3.3% below prior year receipts of $5.71 billion. The surplus was attributable to better than expected income tax collections, a late year surge in severance tax receipts and higher than estimated interest income related revenues. These components were collectively more than $279 million above their estimates. The decline from prior year receipts was largely attributable to a combination of personal income tax rate reductions beginning in the middle of the fiscal year and a new refundable tax credit for certain local property taxes paid.
June General Revenue Fund collections of nearly $577.2 million were $17.9 million above the monthly estimate and 5.4% below prior year receipts. The surplus was largely attributable to higher than anticipated severance tax collections for the month with total collections up by roughly 142% from prior year June receipts. The decline in June collections from prior year receipts was largely due to recently enacted legislation to remove a long-term requirement for some Taxpayers to accelerate payments of sales tax and withholding tax otherwise due in July each year back to the month of June.
“As we expected, Fiscal Year 2025 will end in a surplus – and that’s a good thing for West Virginians,” said Governor Patrick Morrisey. “However, looming federal actions and an increase in state mandatory spending requires us to make smart, fiscally conservative decisions as we begin the new fiscal year. As Governor, I submitted and approved a balanced budget for Fiscal Year 2026, but the state still has fiscal challenges for 2027 and beyond.”
Details by major component follow:
Fiscal Year 2025 Personal Income Tax collections of more than $2.126 billion were $103.1 million above estimate and 5.1% below prior year receipts. A large portion of the surplus was due to a larger than anticipated increase in annual tax return payments made in April when monthly collections exceeded the monthly estimate by $88 million. The decline from prior year receipts was due to the gradual phase-in of a near 5.9% reduction in tax rates effective January 1, 2025 and other provisions reducing the tax base such as the car tax credit. June Personal Income Tax collections totaled $207.7 million. Monthly collections were $10.8 million above estimate and 12.1% below prior year receipts. Tax refund payments were $18 million higher (128%) this June as compared with June of last year. Higher refunds are expected to continue in future months due to additional car tax credit claims not already made. The number of refund returns processed during this refund season were roughly 5% more than last year mainly due to processing of the car tax credit.
Consumer Sales Tax collections of $1.821 billion fell short of the Fiscal Year 2025 estimate by $19.8 million. The shortfall was attributable to a monthly shortfall in June of $31.3 million. The June shortfall was attributable to recent legislation removing a requirement that some Taxpayers accelerate their payments normally due in July. Collections for the year were just 0.3% ahead of prior year receipts. Absent the shift of certain collections from June to July, adjusted collections for the year were roughly 2.4% ahead of last year, an amount roughly equivalent to the rate of inflation.
Fiscal Year 2025 Corporation Net Income Tax collections of $376.2 million were $58.2 million above estimate and 19.2% below prior year receipts. The surplus was partially attributable to the unexpected phase-down of certain tax deductions. Congress unexpectedly failed to enact an extender bill in 2024 to prevent phase-downs of bonus depreciation and other allowable corporate tax deductions. June collections of $55.4 million were 11.8% lower than prior year receipts and $1.4 million below estimate. Federal tax policy uncertainty was a factor in recent tax collection trends relative to estimate.
Fiscal Year 2025 Severance Tax collections totaled $439.0 million. Collections were $32.7 million above estimate and 19% ahead of prior year receipts. June collections were nearly $32.9 million above the monthly estimate and 142% above prior year June receipts, despite a recent Law change to move the monthly due date for severance tax payments from June 15th to June 30th. Revenues from natural gas and steam coal improved significantly in recent months as inventories were replenished following a colder than normal winter heating season. Average natural gas prices since the beginning of Calendar Year 2025 are roughly double prices in the prior year. Average coal prices are down from prior year averages, but the volume of steam coal sales since the beginning of CY2025 is up by more than 25%. Natural gas and coal markets are subject to significant volatility each year due to ongoing changes in both domestic and foreign markets.
General Revenue Fund Tobacco Excise Tax collections of nearly $137.9 million were $9.7 million below estimate and 10% below prior year receipts due to a trend of lower cigarette sales.
Fiscal Year 2025 Insurance Premium Tax collections of $133 million were $13 million above estimate and 10.2% ahead of last year due to continuing inflation in the auto and home insurance markets.
Interest Income totaled $186.8 million in Fiscal Year 2025. Collections were $61.8 million above estimate, but 17.5% below prior year collections. In addition to this interest income, the State also deposited a one-time $23.4 million transfer of interest accrued from ARPA (SLFRF) funds. Therefore, total interest income from all sources was $85.2 million above estimate. Interest income is trending lower over time with declining short-term interest rates. However, short-term interest rates remain significantly above rates incorporated within the Fiscal Year 2025 forecast. We anticipate significant reductions in short-term interest rates in the coming year, but the timing of such reductions is uncertain.
