Governor McAuliffe announced Monday that General Fund revenue collections rose 3.4 percent in October, driven mainly by payroll withholding taxes. Although October is not a significant month for revenue collections, regular collections from withholding, sales taxes and other minor sources come in during the month. On a fiscal year-to-date basis, total revenue collections rose 3.5 percent, ahead of the annual forecast of a 1.7 percent increase.
“This month’s report is encouraging news as we continue to overcome the effects of sequestration and our historic overreliance on federal spending by growing and diversifying our economy,” said Governor McAuliffe. “While we are headed in a positive direction, we still have some difficult decisions to make in order to close a revenue shortfall in the Fiscal Year 2018 budget. We also must continue to work together to build a new Virginia economy so that our families and our budget are less vulnerable to external forces like defense cuts and congressional decision making.”
The main driver of the revenue increase was payroll withholding taxes. With one fewer deposit day compared with last year, collections of payroll withholding taxes rose 4.8 percent in October. Collections of sales and use taxes, reflecting September sales, fell 1.5 percent in October. Finally, collections of wills, suits, deeds, and contracts – mainly recordation tax collections – were $33.0 million in October, compared with $31.8 million in October of last year, a 3.7 percent increase.
On a year-to-date basis, total revenues are up 3.5 percent through October, well ahead of the annual forecast of 1.7 percent growth. Collections of payroll withholding taxes – 64 percent of General Fund revenues – increased 4.3 percent, ahead of the annual forecast of 3.0 percent growth. Sales tax collections – 18 percent of General Fund revenues – decreased 0.3 percent through October, behind the annual forecast calling for a 2.6 percent increase.
The Joint Advisory Board of Economists (JABE) met November 9 to assess recent economic developments and the economic outlook for the current and next biennium. The Governor’s Advisory Council on Revenue Estimates (GACRE) will meet on November 28 to evaluate both the JABE economic recommendations and revenue collections through October. GACRE members’ recommendations will be incorporated into the general fund revenue forecast to be released on December 16 when the Governor meets with the money committees of the General Assembly to introduce his budget recommendations.
To read the full revenue report click here: finance.virginia.gov/media/8089/october-2016-revenue-letter-11-14-16.pdf.
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