State revenues up again in May

May state-revenue collections increased by 17.9 percent over the prior year. This is the 14th month out of the last 15 in which state-revenue collections exceeded the previous year’s amount. It is the sixth out of the last seven in which year-over-year revenue growth was greater than 9 percent.

The revenue increase was primarily driven by a 49 percent increase in nonwithholding receipts (individual final payments based on 2010 tax liabilities). On the other hand, growth in two large sources, payroll withholding and sales tax, slowed. On a year-to-date basis, total revenue collections have risen 5.8 percent, slightly ahead of the revised annual forecast of 3.5 percent growth. Adjusted for the accelerated sales tax program, state revenues have grown 7.3 percent, ahead of the forecast of 5.5 percent.

“The growth in state revenue is a positive sign that Virginia’s economy continues to improve,” Gov. Bob McDonnell said. “However, while 17.9 percent revenue growth is great news, it does not mean we have fully turned the corner from the deep and long-lasting recession that has impacted every Virginian. Like some national economic indicators, our payroll withholding and sales tax collections slowed last month. This means there is still much work to be done before we find ourselves with the full and robust economic recovery our Commonwealth and nation needs.”