Virginia’s general fund tax collections increased by 19.5 percent in January over the same month last year, but Gov. Bob McDonnell continued calling for caution when he announced the news today.
The revenue surge was due largely to an additional January deposit day, which helped boost individual withholding payments by 17.5 percent for the month, McDonnell’s office said. A delay in opening the Internal Revenue Service’s federal electronic filing program also led to a postponement in state refund activity, the administration reported.
Through the first seven months of the fiscal year, total revenue collections have increased 6.2 percent, ahead of the annual 3.6 percent forecast that is embedded in the state budget.
But the governor’s office found reason for concern in the latest monthly numbers. Sales tax collections increased just 0.2 percent in January, reflecting deteriorating consumer confidence and softer holiday retail sales. When adjusted for the partial repeal of the accelerated sales tax program, sales tax revenue has increased just 2.1 percent for the fiscal year, trailing the forecasted growth rate of 3.2 percent. The sales tax accounts for one-fifth of the state’s general fund revenue.
“Virginia’s economy continues to slowly recover,” McDonnell said in a news release. “Our unemployment rate has fallen to a four-year low, and state revenue collections are increasing. This is progress, and it is testament to the bipartisan work we’ve done in Richmond to help create a positive economic environment for our private sector job creators. ”
But McDonnell cautioned that “there is still tremendous uncertainly ahead.”
” Sequestration is a direct threat to our economic recovery, and to the jobs of thousands of Virginians,” McDonnell said. “The President and Congress must come together to ensure that sequestration does not take effect; it would have a devastating impact on our state. At the same time, we must ensure our actions at the state capitol add to the financial health and vitality of our statewide economy.”
– Michael Sluss