Virginia’s General Fund revenues rose in August … bringing the total year-to-date increase in tax collections to 8.8 %. That’s ahead of the annual forecast of 3.7% growth. But state officials are nevertheless urging fiscal caution as lawmakers begin planning for the new biennial budget.
Finance Secretary Ric Brown’s testimony before the House Appropriations panel could be summed up in one sentence.
“Let me say that the news I bring to you for the first couple of months is good, but I would like to see it continue, I’m not sure that it will.”
Brown said the recent revenue increase was driven mainly by individual income taxes—which provide two-thirds of general fund revenue.
Receipts in recordation taxes also rose, but declined in other major sources. For example, corporate income tax collections were down $2.8 million for the fiscal year—compared to $8.4 million last year. But Brown said he hoped sales tax receipts that were below the forecast did not signal a tipping point.
“The concern here is that normally you would see weakness in sales tax before you see it in withholding— weakness in demand. And then as employers start to layoff or cut back in the face of weaker demand, you see some tail-off on withholding,” he said.
Brown also said national indicators suggest a slowdown in economic growth … with now a 40% probability of a double-dip recession.
–Anne Marie Morgan
Virginia Public Radio 