Financing State Government

West Virginia gets the money it needs to maintain its government through the collection of a variety of taxes, fees, and licenses.

Taxes are the major source of the money needed to operate state government.

Sources of State Revenue The basic purpose of any government is to provide services for its peoples. To do this, the government needs revenue.

Sources of State Revenue income tax, sales tax, use tax excise tax, severance tax.

graduated income tax. The personal income tax provides about 37 percent of the state’s income, making it the largest revenue source in the state.

West Virginia also imposes an income tax on the net income earned by corporations.

sales tax The state sales tax was the second largest source of revenue for West Virginia in The state charges a 6 percent tax on almost all retail sales in West Virginia

use tax. The state charges residents a 6 percent tax for items that they purchase from other states through mail- order firms, catalogs, and television shopping networks.

Excise taxes, Sometimes called luxury taxes, are levied on specific products such as gasoline, beer, liquor, firearms, and cigarettes.

severance tax a tax on the amount and value of the minerals and materials severed (taken) from the Earth. This tax was the state’s fifth largest source of revenue in 2003.

Other sources of revenue inheritance and estate taxes. lottery tolls tuition and fees for state’s colleges or universities The federal government provides funds to West Virginia for highways, libraries, water and sewage systems, and educational and social welfare programs.

State Government Spending

Education About 36 percent of the state budget goes to education.

Health and Human Services. about 28 percent of West Virginia’s expenditures went for health and human services.

Other Government Costs. This category of expenditures is quite varied and includes salaries for state workers, funds for the operation of the three branches of government, building maintenance, supplies, and the operation of the state park system. About 17 percent of the state’s revenue is used to provide these services.

Transportation About 14 percent of the state’s budget is earmarked for highways.

Military Affairs and Public Safety. West Virginia allocated over 5 percent of the 2003 budget to improving safety for its residents.

Lottery funds are allocated for, among other things, senior citizens; education, including PROMISE scholarships, infrastructure, and tourism and state parks.