State revenue rose $3.9 billion through May, covering all budget bets | Government and politics
Virginia’s tax revenue is $3.9 billion higher than last year, covering all bets in the pending two-year state budget with the fiscal year ending June 30.
Revenue rose nearly $140 million in May, nearly 10% higher than the same month a year ago, and was up 17.8% for the first 11 months of the fiscal year, as the state’s economy continued its strong recovery from the downturn caused by the COVID -19 pandemic.
“Revenues are up and we’re looking good,” said House Appropriations Chairman Barry Knight, R-Virginia Beach, who said tax revenue looked high enough to pay $585.5 million. dollars in emergency spending in the proposed budget pending action by Governor Glenn. Youngkin this week.
These contingencies include an additional $250 million for the Virginia Retirement System to pay off unfunded state employee and teacher pension debts, for a total of $1 billion. They also include an additional $150 million to widen a 29-mile stretch of Interstate 64 between Richmond and Williamsburg, for a total of $470 million in government funds for the $750 million project.
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Youngkin has until midnight Thursday evening to propose vetoes or amendments to budgets that the General Assembly approved on June 1 for the current fiscal year and the next two years, beginning June 1. The Legislative Assembly is expected to meet on Friday to consider Governor Actions’ decision.
The governor described the latest revenue report as further justification for the tax cuts he has made his top priority in his first year in office. The budgets passed include $4 billion in income and sales tax cuts, but do not include his proposed three-month suspension of the state gasoline tax or the complete repeal of the tax. sale on groceries.
“This report confirms that now is the time to deliver meaningful tax cuts to Virginia families who are being crushed by five-dollar gasoline and record inflation,” Youngkin said in an announcement that also touted an increase. 60,000 jobs in the first five years. month of his administration.
The earnings report confirms that Virginia is likely to have a record year-end surplus, even without the recession-era accounting trick that required retailers, depending on their size, to submit June revenue early to increase revenue at the end of the fiscal year instead of the beginning of the next. Budgets awaiting Youngkin’s actions would end accelerated sales tax collection.
The recovery started more than a year ago under the then government. Ralph Northam, producing what was then a record surplus of $2.6 billion at the end of the fiscal year last June. This year, the House Budget Committees projected more than $13 billion in additional revenue, to which the governor added $1.25 billion midway through the legislative session in February.
The assembly still takes a relatively cautious approach to the economic outlook, proposing to increase financial reserves by $1.6 billion in the face of high inflation, rising interest rates and fears of an economic recession.
“I feel like the rainy day is coming…but there’s no hard evidence of that in earnings yet,” Kniight said Tuesday.
Income taxes withheld from payrolls, accounting for more than 60% of state general fund revenue, rose nearly $140 million in May from a year earlier, and 1.2 billion for the year to date, compared to the previous year.
Quarterly income taxes paid by investors and the self-employed in Virginia fell slightly in May from a year earlier, but rose more than $1.5 billion in the first 11 months from the same period a year ago. Sales tax collections increased by $494 million year-to-date, compared to the prior year.
Transportation fund revenue, which would lose at least $437 million under Youngkin’s proposed gas tax exemption, rose more than $532 million for the first 11 months of the year , compared to the same period last year.
Youngkin took credit for soaring payroll withholdings, which he attributed to the state workforce resuming his administration after large job losses during the pandemic.
“We still have a lot of work to do, but I’m encouraged by our growing workforce, rising wages, and the fundamental strength of Virginia’s economy,” he said.