CHARLESTON, W.Va. -- State tax collections for June fell about 6 1/2 percent below estimates -- in part because taxpayers claimed $29 million in tax credits for alternative-fuel vehicles, according to Deputy Revenue Secretary Mark Muchow.
Legislators passed a Tomblin administration bill in April limiting such tax credits only to vehicles fueled by natural gas or liquid propane. The legislation took effect April 15. The law had allowed a credit equal to 35 percent of the purchase price of the vehicle, up to $7,500 for passenger vehicles.
"The Legislature has fixed the problem prospectively," Muchow said of the law eliminating the tax credit for electric or hybrid vehicles. Vehicles powered by natural gas accounted for about 0.01 percent of the tax credits in June, he said.
Media coverage of the pending elimination of the tax break apparently set off a flurry of purchases of hybrid vehicles.
Overall, tax collections for June came in at $341.9 million -- $24.4 million below estimates for the month.
Besides the alternative-fuel vehicle tax write-offs, the other major drop-off in tax collections was in severance taxes, Muchow said. Severance tax collections for the month were $26.3 million, $14.2 million below estimates, and nearly 22 percent below June 2012 collections.
The downturn in coal production continues to be the major factor, although Muchow said there are signs that the market is leveling off. Natural gas prices are also beginning to increase, which should improve severance tax collections, he said.
Sales tax collections for the month were $12.1 million over estimates, at $96.7 million.
Part of that increase was technical, in that a transfer of a portion of sales tax collections to the Division of Highways that normally occurs in June had been pushed up for the 2012-13 budget year.