CHARLESTON, W.Va. — State Revenue Secretary Bob Kiss says FEMA reimbursements from the June 23rd flood could benefit the state’s consumer sales tax collections in the coming months.
“That money is going to be spent buying items, which will be subject to sales tax, rebuilding materials, so you may see a benefit from that economic activity generated from that significant inflow of money,” Kiss said on Tuesday’s MetroNews “Talkline.”
Last week, the state Department of Revenue confirmed collections were $32.6 million below estimates for the month of July — the first month of the 2017 Fiscal Year.
The shortfall was largely due to the sales tax which came in at $22 million under estimates, Kiss said.
“Businesses closed. Kanawha County is a good example,” he said of the flood’s aftermath. “Hopefully they’ll be back up and running, but they closed in June because of the flood. They’re not generating sales tax and economic activity.”
A number of possible factors to July’s figures, Kiss said, could be greater participation in the local sales tax program, the timing of annual transfers, the state budget gridlock, increase in healthcare expenditures, which are not subject to sales tax and the increase of Home Rule municipalities in West Virginia.
Kiss said they “weren’t surprised” about the low severance and income tax numbers for July.
“They’re still not what we wish they would be, but our estimates seem to be fairly on target,” he said. “What threw us for a loop is the sales tax. We hope that the reasons that we talked about are it because those, I think, are short term reasons which will correct themselves.”
State sales tax collections were down about 10 percent in July, but resulted in 23 percent by the end of the month due to revenue transfers to local governments and to special revenue funds, Kiss said.
The personal income tax finished at $11.2 million under estimates. Severance tax collections were $2.1 above estimates. Tax collections on tobacco products were $5.7 million above estimates.
The department said revenue collections for this July were 10.6 percent less than July 2015 collections.
September marks the first quarter of the 2017 Fiscal Year. Until then, Kiss isn’t making any predictions about what the entire year will look like.
“It’s a little too early to decide we got to do something at this point or that we’ve got a major catastrophe, but we need to keep watching, as we always do, what the next month looks like and the month after that,” Kiss said.
Overall, Kiss said West Virginia could be partly bottoming out of a recession.
“I think there is some stabilization occurring. We see it, in particular, with the income tax and severance tax at least in those fields,” he said.