Gov. Ralph Northam says Virginia is in the money, clocking in a historic $2.6 billion surplus, the largest in the Commonwealth’s history.
Despite the COVID-19 pandemic, Virginia’s total revenue collections for fiscal year 2021 soared 14.5% over 2020, according to a news release. That’s ahead of the forecast of 2.7% growth.
“We have effectively managed Virginia’s finances through the pandemic, and now we are seeing the results — record-breaking revenue gains, a recovery that has outpaced the nation, and recognition as the best place to do business,” Northam said.
“Fueled by a surging economy, federal American Rescue Plan funds, and the largest surplus in Virginia history, we have significant resources available to make transformational investments in this Commonwealth,” he added. I look forward to working with the General Assembly in the fall to seize this opportunity so we can build a brighter future for all Virginians.”
According to the release, all major general fund revenue sources exceeded their forecasts for the fiscal year.
Total revenue collections hit $8.6 billion in the final quarter of fiscal year 2021. In June, revenues decreased by $180.8 million — 5.8% — compared to the previous year, due to the tax filing deadline extension.
“We expected a strong revenue performance and this surplus is even larger than initially anticipated,” Secretary of Finance Joe Flores said in the release. “We are encouraged that for the fiscal year, payroll withholding and retail sales taxes increased by 6.4 percent signifying that Virginia’s underlying economic foundation is strong.”
A revenue breakdown is below.
- Total general fund revenue collections, excluding transfers, exceeded the official forecast (Chapter 552) by $2.6 billion (11.7 percent variance) in fiscal year 2021.
- The 30-year average general fund revenue forecast variance is 1.6%.
- Payroll withholding and sales tax collections, 80% of total revenues, and the best indicator of current economic activity in the Commonwealth, finished $560.2 million or 3.3% ahead of the forecast.
- Payroll withholding grew by 4.7%, exceeding the forecast of 2.7% growth.
- Sales tax collections increased 12.4% as compared to the annual forecast of 4.7% Brick and mortar store sales increased 7.6% and internet sales increased 32.3%.
- Fourth quarter results show that payroll withholding and sales tax grew 12.5%.
- Nonwithholding income tax collections finished the year ahead of expectations, up 37.1%. This was mainly due to a 68% increase in final payments to the Department of Taxation. Estimated payments increased 19.8%.
- Individual income tax refunds were a positive to the forecast as the average check size did not increase. Tax refunds were $339.4 million below expectations, a positive to the bottom line.
- Corporate income tax collections increased 49.8% for the year, ahead of the annual forecast of 27.4%. A preliminary analysis of the data reveal a broad based increase from larger corporations based on economic related growth.
- A complete analysis of all final receipts for revenue sources, including transfers, will not be available until the Joint Money Committee meeting on Aug. 18.