~ Payroll Withholding and Sales taxes accounted for much of the gain ~
Governor McAuliffe announced recently that October general fund revenues rose 7.7 percent in October, driven mainly by payroll withholding, sales, and corporate income taxes. On a fiscal year-to-date basis, total revenue collections rose 4.9 percent, ahead of the annual forecast of a 2.7 percent increase.
“These revenue numbers are a clear indication that the work we have done to build a new Virginia economy over the past four years is paying off,” said Governor McAuliffe. “As my team and I formulate the Commonwealth’s next biennial budget, we are working hard to produce a balanced spending plan that invest in priorities that will continue our economy growth and create more opportunities for families all across Virginia.”
October is not a significant month for revenue collections. Regular monthly collections are due in withholding, sales taxes, and most minor sources. Due to recent federal legislation and administrative action by the IRS, corporations now have a seven-month filing extension for Virginia income tax purposes. Therefore, corporate extension returns are due in November this year rather than October.
Collections of payroll withholding taxes rose 4.0 percent in October. Receipts from sales and use taxes, reflecting September sales, grew 9.0 percent in October. Collections of wills, suits, deeds, and contracts – mainly recordation tax collections – were $34.0 million in October, compared with $33.0 million in October of last year, a 3.1 percent increase.
On a year-to-date basis, total revenues are up 4.9 percent through October, well ahead of the annual forecast of 2.7 percent growth. Collections of payroll withholding taxes – 63 percent of general fund revenues – increased 4.0 percent, ahead of the annual forecast of 1.8 percent growth. Sales tax collections – 18 percent of general fund revenues – increased 4.5 percent through October, ahead of the annual forecast calling for a 2.8 percent increase.
Virginia state government is currently in the process of reassessing its general fund forecast for the purpose of budget development. The Joint Advisory Board of Economists (JABE) met on October 11 to assess recent economic developments and the economic outlook for the current fiscal year and next biennium. The Governor’s Advisory Council on Revenue Estimates (GACRE) will meet on November 20 to evaluate both the JABE economic recommendations and revenue collections through October. GACRE members’ recommendations will be incorporated into the general fund revenue forecast to be released on December 18 when the Governor meets with the money committees of the General Assembly to introduce his budget recommendations.