Newspaper article Charleston Gazette Mail

W.Va.'S Recession Recovery below National Average ; Mountain State Tax Collection Peaked in 2007, Began Fall in 13

Newspaper article Charleston Gazette Mail

W.Va.'S Recession Recovery below National Average ; Mountain State Tax Collection Peaked in 2007, Began Fall in 13

Article excerpt

A new report from Pew Charitable Trusts shows that revenue in a majority of states has recovered from the recession of 2008-09, although recoveries have varied widely, with revenue in 21 states still below the pre-recession peak year of 2007 when adjusted for inflation. West Virginia's tax revenue, as of the middle of 2015, was above 2007 - but barely, at 1.1 percent growth, and lagging below the national average of 5.6 percent, according to the report.

The Pew study found that, from the end of the recession through the end of 2012, West Virginia revenue collection recovered ahead of the national average - but that changed in 2013, when state revenue began a nearly two-year downturn.

Ted Boettner, executive director of the West Virginia Center for Budget and Policy, said that's not surprising, as elimination of the sales tax on food and the business franchise tax, along with cuts in the corporate net tax converged with a downturn in coal production and plunging natural gas prices.

"The tax cuts cost us $425 million a year, if not a lot more, he said.

With the cuts, the business taxes went from providing about 10 percent of West Virginia's general revenue budget to about 5 percent, leaving the state dependent on severance tax collection, from coal and natural gas, to make up the losses.

"We've been more reliant on a very volatile source of revenue, Boettner said. "2013 truly is a reflection of ultra-low natural gas prices and the structural decline of coal in the state.

Deputy Revenue Secretary Mark Muchow said a surge in severance tax collection - spurred by a 360 percent jump in natural gas production - initially offset any impact from the tax cuts.

Muchow said West Virginia fared better than most states during the recession, and came out of it into a strong energy market and high demand for exports, particularly for metallurgical coal, used to produce steel.

Exports peaked in 2012, at about $12 billion, but started to fall as economies softened in China, Europe and Brazil, he said. …

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