State’s Oct. revenues fall 2.7%, less than expected
Governor says Va. on sound footing despite pandemic
FRIDAY, NOVEMBER 13, 2020
An expected decline in state revenues last month, compared with the same month a year ago, wasn’t as bad as Virginia officials had feared.
Revenues in October were down $44.5 million, or 2.7%, in October compared with October 2019, but that was because of
• • • one fewer payroll deposit day this year for income taxes withheld from paychecks — the single biggest source of money for the general fund budget that supports core state government services.
The outlook is still strong for the first part of the fiscal year, with revenues up by about $438 million, or 6.7%, compared with the first four months of last year. The rise is even higher, $556 million, compared with the revised forecast in the newly adopted budget in response to the COVID-19 pandemic and its economic fallout, which predicted an annual decline of 1.8%.
“This month’s revenue report shows that Virginia is on sound financial footing despite the ongoing COVID-19 pandemic,” Gov. Ralph Northam said Thursday. “We must stay focused on beating this virus first and foremost, so we can remain on a road to recovery and continue moving our commonwealth forward.”
Secretary of Finance Aubrey Layne said the monthly decline “largely reflects an anticipated decline in payroll withholding” of state income taxes. The 4.6% monthly decline in withholding was mostly offset by gains in taxes on sales and court transactions, such as deeds and contracts, both of which have performed much better than expected.
Thanks to internet sales, sales tax collections grew by about $27 million, or 8.6% in October over the same month last year and about $85 million, or 7.8% in the first four months of the fiscal year that began on July 1, compared with the same period a year ago. The annual forecast predicted a 9.7% decline.
Recordation taxes on deeds, contracts, wills and lawsuits increased by $17.6 million, or almost 42%, in October compared with a year earlier, and $61.3 million, or about 37% for the fiscal year.
“Although October is not a significant month for revenue collections, this report confirms that Virginia continues to be on a prudent path of forecasting
RICHMOND TIMES-DISPATCH revenues and budgeting in these unique times,” Layne said.
The revenue report is the last before Northam proposes a new two-year state budget on Dec. 16. It will be based on a new revenue forecast his administration is developing with the help of the Joint Advisory Board of Economists, which met last week, and the Governor’s Advisory Committee on Revenue Estimates, which will convene Nov. 23.