Virginia state revenues down $439 million from forecast

virginia-blue-oversizeGovernor Terry McAuliffe announced today that preliminary figures indicate the state concluded Fiscal Year (FY) 2014 with an approximately $438.5 million shortfall in general fund revenue collections, excluding transfers.

Total general fund revenue collections declined by 1.6 percent in FY 2014, behind the revised revenue forecast of 1.0 percent growth. This marks the first time that Virginia revenues have declined outside of a national recession.

The main driver of the revenue decrease was a large drop in nonwithholding payments.  Despite record-breaking increases in the stock market, it appears that the uncertainty about the federal Fiscal Cliff in December 2012/January 2013 shifted more realized capital gains from 2013 into 2012 than expected.  Revenue collections during the last quarter of each fiscal year are significant in this regard because upper income individuals who have a significant portion of their income based on capital gains pay a substantial portion of their tax liability in the April to June period.

A comprehensive breakdown of the preliminary FY 2014 revenue shortfall is shown below.  The final FY 2014 tally will not be available until mid-August.

 

Analysis of Fiscal Year 2014 Revenues

Based on Preliminary Data

  • Total general fund revenue collections fell short of the official forecast by $438.5 million (-2.7 percent variance).
    • Total general fund revenues declined 1.6 percent compared with the forecast of 1.0 percent growth.
  • The revenue shortfall is primarily due to a large drop in individual nonwithholding collections. That source, which is made up on non-wage income (mainly capital gains), was $401.1 million off the mark.
  • Payroll withholding and sales tax collections, 83 percent of total revenues and the best indicator of current economic activity in the Commonwealth, also fell short of the forecast by $78.9 million, a forecast variance of -0.6 percent.
    • Estimates for these two sources are directly tied to the economic outlook developed during the fall forecasting process, and specifically, the outlook for jobs and wage income in the Commonwealth.
    • The general weakness in withholding and sales tax collections over the last several quarters is indicative of the negative effect that federal government spending cuts are having on the Commonwealth.

ADDITIONAL DETAILS

  • Individual income tax withholding, 64 percent of total general fund revenues, was below the estimate by $66.0 million (-0.6 percent variance).
    • Annual collections increased 2.3 percent compared with the forecast of a 2.9 percent increase.
  • Individual income tax nonwithholding collections, 15 percent of total revenues, fell 10.1 percent in fiscal year 2014 reversing the 19.1 percent gain in FY 2013, despite a record-level stock market increase in both years. Total nonwithholding collections fell short of the annual estimate by $401.1 million (-14.3 percent variance).
  • Individual refunds finished $51.3 million (-3.0 percent variance) below the annual estimate, a net positive for the Commonwealth.
  • Taken together, withholding, nonwithholding, and refunds, i.e. net individual income taxes, fell 0.8 percent, behind the annual forecast by $415.7 million, a forecast variance of 3.7 percent.
  • Sales and use tax collections, 19 percent of total revenues, fell short of the annual estimate by $12.9 million (-0.4 percent variance).
  • Corporate income tax collections, 5 percent of total revenues and one of the most volatile revenue sources, declined by 4.9 percent, compared with the forecast of a 3.4 percent decline.
  • Wills, Suits, Deeds, and Contracts (primarily recordation tax collections), 2 percent of total revenues, finished the year $66.7 million (-17.7 percent variance) behind the annual projection of no growth.

Insurance premiums tax, 2 percent of total revenues, exceeded the annual estimate by $31.0 million (11.8 percent variance).



augusta free press
augusta free press news

UVA Basketball Fans!

uva basketball team of destiny
Team of Destiny: Inside Virginia Basketball’s Run to the 2019 National Championship, by Jerry Ratcliffe and Chris Graham, is available for $25. The book, with additional reporting by Zach Pereles, Scott Ratcliffe, and Scott German, will take you from the aftermath of the stunning first-round loss to UMBC in 2018 through to the thrilling overtime win over Texas Tech to win the 2019 national title, the first in school history.

Dick Vitale on Team of Destiny: “This is a hoops story you will LOVE! Jerry and Chris capture the sensational and dramatic championship journey by Tony Bennett and his tenacious Cavalier team. UVA was Awesome Baby and so is this book!”

Ralph Sampson on Team of Destiny: “Jerry and Chris have lived and seen it all, even before my time. I highly recommend this book to every basketball fan across the globe. This story translates to all who know defeat and how to overcome it!”

Buy here.

AFP Business

As professional consultants, Augusta Free Press LLC provides clients in the Shenandoah Valley and Central Virginia and beyond with marketing and PR solutions including website design, SEO, TV/radio, video work, branding and logos, social media and overall marketing campaign design and implementation. Augusta Free Press LLC was founded in 2002.

Web Design

Augusta Free Press has designed more than 800 websites for clients in the Shenandoah Valley and Central Virginia. We take care of all facets of web design – visual design, layout design, content development and SEO. Short on staff? We’ll work with you to update your AFP-designed website in a timely manner or train your staff to make changes.

Marketing/Social Media Management

Augusta Free Press manages advertising campaigns for small- and medium-sized businesses across Virginia. You don’t need to hire a full-time marketing coordinator. Bring the experience of the Augusta Free Press team to work for you – for a fraction of the cost.

Graphic Design

Augusta Free Press will help you take your vision to the next level. From branding and logos to print materials, our team will work with you to develop products to showcase your business. From brochures and rack cards to full-color magazines or print/digital ads, we’ve got you covered.

Event Planning/Fundraising

Augusta Free Press will help you plan the best event for your organization. From an open house or anniversary to a 5K or Pay Per View, we can handle it all. Looking for training for your sales staff? We can help energize your employees or board. Need ideas to raise more money? Let us help you plan a successful event. Want to hold a news conference or need help with a press release? We can do that too.

Click here for more.