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RICHMOND—Governor Northam today announced that total general fund revenues grew 26.6 percent in February, mainly due to a delay in the start of the individual income tax processing season, which resulted in fewer refunds being issued. In addition, the major revenue sources performed at or better than expectations for the month. On a fiscal year-to-date basis, total revenue collections rose 3.5 percent, behind the annual forecast of 5.9 percent growth. Although collections are lagging the annual estimate, growth is expected to be higher for the remainder of the fiscal year due to effects of the federal Tax Cuts and Jobs Act.
“February is not a significant month for state revenue collections, but this report is encouraging and reflects the strong underlying economic activity in our Commonwealth,” said Governor Northam. “While the timing of individual income tax refunds can have a considerable impact on general fund revenues and therefore may not be indicative of long-term trends, we know that we still have work to do to ensure sustained positive growth and maintain our fiscal health. I am proud of the success we have had in diversifying our economic base and I remain confident that Virginia’s economy is headed in the right direction.”
Collections of payroll withholding taxes were essentially flat with a 0.1 percent decrease in February. This was expected given that last February saw 11.8 percent growth. Collections of sales and use taxes, reflecting January sales, rose 4.2 percent in February. February receipts include January post-holiday sales and gift card purchases, completing the holiday shopping season. The main tax return filing season began in February; however, implementation of changes in state conformity to new federal tax law delayed processing. The Department of Taxation issued $218.4 million in refunds compared with $442.6 million in February of last year. In February, the Department of Taxation issued about 519,000 refunds compared to last February’s 867,000. March should provide a better assessment of refund activity as the backlog of returns is processed.
On a year-to-date basis, collections of payroll withholding taxes—62 percent of General Fund revenues—increased 3.3 percent behind the annual forecast of 3.8 percent growth. Sales tax collections—17 percent of General Fund revenues—increased 4.1 percent through February, ahead of the annual forecast calling for a 3.7 percent increase. Total revenues rose 3.5 percent through February, behind the annual forecast of 5.9 percent growth.
To view the full report, click here.
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