CHARLESTON, W.Va. -- State tax collections continued to run about 3 percent below estimates in October, dragged down by personal income tax collections that fell $7.78 million below projections, deputy Revenue secretary Mark Muchow said Monday.
"The biggest issue is a lack of significant growth in wages and salary income from this time a year ago to now," Muchow said, saying the lack of pay raises for most workers in the state has kept personal income tax collections flat.
The largest single tax source for the state, personal income tax collections for the first four months of the 2013-14 budget year of $537.22 million are down about 2.5 percent from the same point in 2012, he said.
However, that's a significant improvement from July, when income tax collections were down nearly 15 percent, in part because of car buyers taking advantage of a generous write-off for purchases of flex-fuel and other alternative fuel vehicles.
Repealed in April, a surge of car buying before the tax credit expired cost the state about $100 million in lost revenue, with July being the last month with a significant amount of credits claimed, Muchow said.
The other major tax source, consumer sales taxes, came in $347,000 below estimates, at $101.93 million, and down about 1 percent from October 2012.
"The weakness in sales taxes reflect the lack of wage and salary growth," Muchow said, saying that makes consumers more cautious.
Overall October tax collections of $313.54 million were $8.13 million below estimates. For the budget year-to-date, collections of $1.29 billion are $42.5 million below projections.
State legislators and Gov. Earl Ray Tomblin's administration have also cut several taxes in recent years, including the corporate net income tax and the business franchise tax, and have completely eliminated the sales tax on food. Those cuts have led to about $300 million less in revenue for the state in 2013, according to the West Virginia Center on Budget and Policy.
Severance tax collections were a bright spot for October, coming in 16 percent above estimates at $34.93 million.