State revenues up sharply in October: Nice ease-in for Gov.-elect Youngkin?

Good news for incoming Gov.-elect Glenn Youngkin: he’s getting the keys to a strengthening Virginia economy.

The lame duck, Gov. Ralph Northam, announced today that state general fund revenues were up 15.6 percent in October, driven by impressive growth in payroll withholding and sales tax collections.

“We are excited to see increased revenue collections once again,” Northam said. “This continued growth is a reflection of the Commonwealth’s responsible fiscal management—our smart investments continue to pay off for Virginians.”

Collections of payroll withholding taxes grew 9.8 percent in October. Collections of sales and use taxes, reflecting September sales, rose 12.2 percent in October. Collections of wills, suits, deeds, and contracts were $55.8 million in October, compared with $59.9 million in October of last year, a 6.8 percent decrease and the first decrease in 14 months.

“Despite strong headwinds during the first quarter of fiscal year 2022 due to the Delta variant, supply chain issues and inflationary pressures, October’s positive revenue growth continues to demonstrate Virginia’s economy is on a solid path toward recovery,” Secretary of Finance Joe Flores said.

On a fiscal year-to-date basis, total revenue collections grew 11.8 percent, ahead of the annual forecast of an 8.0 percent decrease. Collections of payroll withholding taxes—62 percent of General Fund revenues—increased 9.7 percent, ahead of the annual forecast of 1.7 percent growth.

Sales tax collections—17 percent of General Fund revenues—increased 15.4 percent through October, ahead of the annual forecast calling for a 4.2 percent decline.

The Joint Advisory Board of Economists met on October 13 to assess recent economic developments and the economic outlook for the current and next biennium. The Governor’s Advisory Council on Revenue Estimates will meet on November 22 to evaluate both the Joint Advisory Board of Economists’ economic recommendations and revenue collections through October.

The Governor’s Advisory Council on Revenue Estimates members’ recommendations will be incorporated into the general fund revenue forecast to be released on December 16 when the Governor meets with the General Assembly money committees.

The full report is available here.