Virginia general fund revenues rose 0.4 percent in January from the previous January. Although collections are lagging the annual estimate, growth is expected to be higher in the second half of the fiscal year due to effects of the federal Tax Cuts and Jobs Act on the timing of payments for individual and corporate income taxes.
“I am pleased to see continued positive revenue performance in January, demonstrating that Virginia’s economy is strong and putting the Commonwealth in a solid position for additional growth,” said Gov. Ralph Northam. “We expect to see revenues increase further in the second half of the fiscal year, and my team will remain focused on implementing strategies to invest in our workforce, diversify our economic base, and build upon this momentum.”
January is a significant month for revenue collections. Besides the normal monthly payroll withholding and sales tax collections, estimated payments from individuals are due in January. Collections of payroll withholding taxes grew 0.9 percent for the month. The federal government shutdown did not have an effect this month because the shutdown ended and back pay was issued. Collections of sales and use taxes, reflecting December sales, rose 0.8 percent in January.
The combined December and January receipts, representing the bulk of the holiday shopping season, was 3.9 percent above the same period last year. Also, December and January are significant months for collections of nonwithholding and receipts can be distorted by the timing of payments. Taxpayers had until January 15 to submit their fourth estimated payment for tax year 2018 and some of these payments are received in December.
Receipts of nonwithholding for the two-month period fell 36.4 percent from last year.
On a fiscal year-to-date basis, total revenue collections rose 1.3 percent through January, behind the annual forecast of 5.9 percent growth. Year-to-date, withholding collections are 3.9 percent ahead of the same period last year, above the annual estimate of 3.8 percent growth. On a year-to-date basis, sales tax collections have risen 4.0 percent, ahead of the annual estimate of 3.7 percent growth. Nonwithholding collections for the first seven months of the fiscal year fell by 15.5 percent, behind the annual estimate of a 15.2 percent increase. On a fiscal year-to-date basis, total revenue collections rose 1.3 percent through January, below the annual forecast of 5.9 percent growth.
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