Strong labor market reflected in Virginia’s general fund growth

The Commonwealth’s general fund grew by 13 percent in August 2022 compared to August 2021.

Totals for August, according to a press release from Gov. Glenn Youngkin’s office, exceeded forecasts because of an additional deposit day that included payroll withholding taxes from many of Virginia’s large employers. Revenues also increased approximately 5.4 percent in the last year.

“This report shows our purposeful efforts since day one continue to place Virginia in a strong financial position,” Youngkin said in the press release. “Virginians can be confident in our efforts to keep the Commonwealth moving forward, with that said, economic headwinds continue due to inflation-inducing policies at the federal level, and we continue to dig out from the unnecessary closures during the pandemic that crippled Virginia businesses.”

Payroll withholding increased by 19.8 percent in August 2022, according to the press release. Growth in payroll withholding was encouraged by wage growth, the additional deposit day and a strong labor market. In July 2022, 142,000 more Virginians were employed than in July 2021, which reveals an increase of 3.5 percent. Virginia has more than 113,000 jobs to still recover that were lost during the pandemic.

“August collections exceeded projections, driven by employment and wage growth year-over-year,” Secretary of Finance Stephen Cummings said in the press release. “However, persistent high inflation, rising interest rates, concerns regarding worsening economic conditions and slowing job growth have the potential to impact future revenue collections. We continue to monitor these issues and will have a better indication of current trends after September month-end, including the first estimated payments for nonwithholding and corporate tax collections.”