Virginia government revenues down sharply in May
Virginia general fund revenue collections fell 20.6 percent in May, but that was actually slightly better than had been expected.
“The restrictions we put in place to protect the health and safety of Virginians during this pandemic resulted in loss of jobs and of income, and our state revenues reflect that,” Gov. Ralph Northam said. “As our economy slowly begins to open up, we will continue to closely monitor revenue collections and take responsible steps to guide our economic recovery.”
May is typically a significant month for revenue collections. In addition to regular collections of withholding and sales taxes, estimated and final payments for individuals were due May 1. This year, the governor authorized any individual and corporate income tax payments due between April 1 and June 1 to be due on June 1.
The extension applies to final payments and extension payments for taxable year 2019, and the first estimated payment for taxable year 2020. Therefore, June receipts will be required to properly assess total fiscal year revenues.
On a fiscal year-to-date basis, total revenue collections have declined by 1.2 percent, trailing the annual forecast of 3.1 percent growth.
To attain the current official revenue forecast, June collections must be $3.3 billion, compared with $2.4 billion collected in June of last year.
“Although there were two fewer deposit days and a broad-based decrease in the number of firms paying due to business closures, we are encouraged by the underlying resilience of the Virginia economy,” Secretary of Finance Aubrey Layne said. “This performance is slightly better than anticipated and is in line with our updated revenue projections.”
Collections of payroll withholding taxes fell 13.0 percent in May. Collections of sales and use taxes, reflecting April sales, fell 12.5 percent in May. The month represents a full month of reduction in sales due to numerous store closings during the COVID-19 pandemic.
On a year-to-date basis, collections of payroll withholding taxes—62 percent of General Fund revenues—increased 3.1 percent, trailing the annual forecast of 4.7 percent growth. Sales tax collections advanced 5.4 percent on a fiscal year-to-date basis, also trailing the annual forecast of 7.4 percent growth.
On a fiscal year-to-date basis, total revenue collections fell 1.2 percent in May behind the annual forecast of 3.1 percent growth. Collections in June must total $3.3 billion to attain the forecast. Collections in June of last year were $2.4 billion, and June collections are anticipated to be greater than the previous year due to delayed tax payments due June 1.
The full report is available here.