On February 15, Governor Ralph Northam notified the chairs of the “money committees” that revenue collections had performed well enough to warrant a mid-session reforecast. General Fund revenues are now expected to increase by $730.2 million over the biennium relative to estimates included in the December introduced budget – $410.1 million in FY 2021 and $320.1 million in FY 2022. The increase is largely attributable to continued strength in sales tax collections, which have grown by 6.5 percent on a fiscal year-to-date basis (the December introduced budget had predicted a 2.6 percent decline in FY 2021). Individual income tax withholding, the lion’s share of General Fund revenues, has underperformed thus far in the fiscal year, growing by 0.4 percent (the December budget had assumed growth of 2.7 percent in this revenue source).
The reforecast does not adjust estimates for income tax collections, noting that “there are numerous unknowns on taxpayer behavior for filing, when significant rehiring may begin, and non-wage income gains last year.”
The additional revenues will now become part of the budget conference discussions, where they may ease in bridging differences between the two chambers’ respective proposals. However, House Appropriations Committee Chairman Luke Torian sounded a note of caution in his remarks to Committee members on Monday afternoon after a brief presentation on the additional expected resources, pointing out that state budget needs will continue after the enhanced federal support that has been provided to assist in the pandemic recovery comes to an end.
VACo Contact: Katie Boyle