Posts > Mountain State Spotlight Explains: Why West Virginia’s Reliance on Volatile Severance Taxes is Problematic
April 10, 2023

Mountain State Spotlight Explains: Why West Virginia’s Reliance on Volatile Severance Taxes is Problematic

Mountain State Spotlight, Fayette Tribune – For months, West Virginia lawmakers have said one thing repeatedly: the state has more than $1 billion in budget surplus. And when you look at the numbers, that’s largely thanks to the severance tax. 

Read the full article.

That trend continued last week, as Gov. Jim Justice announced that the state had collected close to $800 million in severance taxes since July, far outpacing the roughly $250 million it estimated it would take in. This growth has fueled increased optimism about the state economy, and Justice and others have used it to help justify recent policy decisions like income tax cuts. 

But severance taxes — which are collected on natural resources extracted in the state — are extremely complicated and can fluctuate wildly. And as West Virginia touts its increased surplus achieved largely through this volatile tax, some policy experts are urging caution on how the state spends its money, particularly as it makes long-term decisions with what could turn out to be short-term gains. 

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