CHARLESTON, W.Va. -- For the past few years, West Virginia hasn't had to tap into a $45 million reserve fund set aside to pay state income tax refunds on a timely basis.
This year, though, the government will spend all or most of the money in that account, Deputy Revenue Secretary Mark Muchow said Thursday.
State tax collections are running $7.8 million below estimates, and that deficit will become worse Friday, when February's tax collections are tabulated, he said.
"We expect that to go up considerably when the February numbers come out," Muchow said of the revenue deficit -- a deficit he expects to get worse over the remaining four months of the budget year.
"I have reason to believe, when we get to the end of the year, it will be significant," he said.
Asked if the tax revenue shortfall could reach the $45 million figure, Muchow said, "It's a good possibility, by the time the year ends."
He said tax collections are taking a hit because the three biggest revenue sources -- income taxes, sales taxes and severance taxes -- have seen downturns.
Muchow said the first two categories were hurt, in part, when a federal 2 percent payroll tax cut expired on Jan. 1.
"When people's paychecks are reduced, they tend to spend less," he said.
Severance taxes, meanwhile, continue to be hurt by a decline in coal production and by near-record low natural gas prices.