Virginia state revenues up sharply: Youngkin continues push for tax cuts
April Virginia revenue collections exceeded forecasts, pushing state revenues $1.9 billion higher year-to-date than the mid-session revised forecast issued in February.
Total revenue collections have risen 19.0 percent through April, well ahead of the revised annual forecast of 9.2 percent growth.
Gov. Glenn Youngkin used the report released on Thursday to push his proposed tax cuts that are getting little traction among state lawmakers.
“Virginia’s economy continues to show encouraging signs of growth. We’re growing jobs, growing paychecks, and more people are joining the workforce,” Youngkin said. “This report confirms the strong trajectory forecasted for state revenue and we continue to see mounting evidence that the time is now to cut taxes. Inflation is stealing more money from the paychecks of hardworking Virginians, who are paying near-record prices at the pump and we know there’s plenty of money in the system to reduce taxes and lower the cost of living in the Commonwealth.”
“Much of the extraordinary year-over-year growth in April in non-withholding collections was driven by the change in the federal tax filing date back to April in 2022 versus May in 2021,” said Secretary of Finance Stephen Cummings. “We will need to look at the combined results of April and May compared to last year to know the overall trends in this category. However, general revenue categories unaffected by that timing difference, mainly payroll withholding and sales tax collections, continued their strong growth over the prior year, and this trend speaks to the uptick in jobs, consumer activity and inflation.”
In percentage terms, payroll withholding and sales tax collections grew 4.8 percent and 8.4 percent in April, respectively. Fiscal year-to-date, withholding revenues are up 9.5 percent, ahead of the full-year forecast growth rate of 9.0 percent, and sales tax collections are up 14.4 percent, ahead of the annual 11.4 percent forecast.
Continued revenue growth is supported by a steady economy as well as recent improved job growth. From January to March, the number of employed Virginians increased by 42,000, ranking Virginia 14th among the states for employment growth during that time. The labor participation rate in Virginia has improved slightly, but Virginia’s drop in labor participation since the start of the pandemic remains among the worst in the nation.
Despite recent strong performance, more work is needed in this area since Virginia has yet to recover more than 170,000 jobs that were lost during the pandemic and ranks 47th in jobs recovered since the pandemic.
The full April 2022 revenue report is available here.