Money Committees Receive Updates on State Revenues, SNAP Error Rate Efforts

The Senate Finance and Appropriations Committee met on October 14 in Portsmouth for an update on state revenues, a briefing on the health of the state economy, an update from the Virginia Retirement System, and a report from the Virginia Department of Social Services on efforts to improve Virginia’s administration of the Supplemental Nutrition Assistance Program (SNAP).  The House Appropriations Committee was also briefed on state revenues a few days later, meeting on October 20 for a presentation from Secretary of Finance Stephen E. Cummings, as well as an update on discussions regarding transit funding for Northern Virginia, and a report on capital projects administered by the state’s Department of General Services.

Secretary Cummings reported another month of strong revenue growth in September, with revenues exceeding the forecast by 9.8 percent.  On a fiscal year-to-date basis, revenues are outpacing the forecast by 7.9 percent, or $561 million.  Individual income tax withholding collections continue to perform particularly well, outpacing projections by 7.6 percent, or $315.5 million, year-to-date, although this level of growth is not expected to persist.  Sales and use tax collections are slightly outperforming projections, and are 1.4 percent, or $17.5 million, above projections on a fiscal year-to-date basis.  The most up-to-date official government employment statistics are not available due to the federal government shutdown, but private sector data suggest that employment declined nationally and in Virginia in September; however, Secretary Cummings reminded both committees that unemployment in Virginia, although rising, remains at a low 3.6 percent, below the national rate of 4.3 percent.  (The Secretary provided updated figures in his October 20 presentation indicating that initial unemployment claims spiked in the week ending October 11, likely partially related to “federally-adjacent” claims; initial unemployment claims by federal employees also increased substantially, although Virginia’s numbers are far below those of Maryland and the District of Columbia.)  The shutdown is not anticipated to have a significant effect on the state General Fund, based on past experiences in which federal employees received back pay when the government reopened, although some state employees whose positions are federally funded were to be furloughed October 15, with the potential for more furloughs if the shutdown continues, and funding for certain programs, including SNAP, will run out at the end of the month.

Professor Robert McNab, Chair of the Department of Economics at Old Dominion University, took a more guarded view of the state’s economy, cautioning that reductions in federal employment and persistent tariffs affecting business at the Port of Virginia will hamper growth, and expressing a view that “[t]he growth prospects for the Commonwealth are markedly diminished from January 2025.”

Principal Deputy Commissioner of the Department of Social Services Carl Ayers reported on the Administration’s SNAP Forward initiative to reduce the SNAP payment error rate.  Provisions in the federal reconciliation legislation require the state to contribute a portion of the cost of SNAP benefits, beginning October 1, 2027, if the state’s error rate exceeds 6 percent.  The Virginia Department of Social Services (VDSS) has been investigating the root cause of the error rate, with the assistance of a consultant, and determining how other states have successfully improved their performance; local staff have been required to complete additional training, and the state has been providing targeted technical assistance and training to the departments with the largest SNAP caseloads.  VDSS is also exploring some near-term technology enhancements to improve accuracy.

Senate Finance and Appropriations Chair Louise Lucas concluded the October 14 meeting with a reiteration of the concerns she expressed at the Committee’s last meeting about the substantial budget pressures that are expected in the coming session, including rebenchmarking of the Standards of Quality, growth in the Medicaid program, and the additional costs required as part of changes to SNAP.  House Appropriations Committee Chairman Luke Torian made similar remarks at the end of the last meeting of the House Appropriations Committee, signaling that both Committees are likely to be cautious in undertaking new ongoing discretionary spending in the months ahead.

VACo Contact: Katie Boyle

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