The Register-Herald, Beckley, West Virginia

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December 5, 2013

Budget cuts possible as W.Va. revenues decline

CHARLESTON — Gov. Earl Ray Tomblin’s administration is considering mid-year budget cuts to offset a decline in state revenues.

The November revenue report released Tuesday shows tax collections were about $57.4 million below estimates for the fiscal year that began July 1. A majority of the decline was due to personal income tax collections, which were $37 million below estimates for the period.

Tomblin chief of staff Charlie Lorensen told the Charleston Daily Mail that the state could impose cuts or a hiring freeze to balance the budget.

Another option is to use funds in accounts set up by the Legislature. But the Governor’s Office would need legislative approval to do so he said.

“We’ll take corrective action,” Lorensen told the newspaper. “It’ll be painful, but it’ll bear fruit.”

The report shows November tax collections were $14.9 million below estimates. Deputy revenue secretary Mark Muchow told media outlets that coal and gas severance taxes accounted for most of the shortfall.

Muchow expects severance taxes to rebound in December. He said the state collected nearly $28 million in severance tax payments on Monday and Tuesday, which will reduce the state’s year-to-date deficit to “the mid-40s range.”

However, he told The Charleston Gazette, “We still have yet to have a month this fiscal year where we exceeded estimates.”

Tax collections must grow by 3.6 percent for the remainder of the fiscal year in order to avoid a budget shortfall, he said. While this is possible, the improvement would need to occur soon, Muchow said.

“The longer we wait, it makes that cliff a little bit harder to climb,” he told The Charleston Gazette.

Sales tax collections, another major component of state tax revenue, were about $660,000 below estimates in November. Muchow said the downturn is attributable to the elimination of the sales tax on food July 1.

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