Governor Youngkin Announces Significant FY 2022 General Fund Revenue Surplus

July 26, 2022

Governor Youngkin announced last week that the state ended FY 2022 with a $1.94 billion General Fund (GF) revenue surplus.  The Governor will present more detailed information to the “money committees” on August 19, but based on the preliminary figures in the Governor’s July 21 announcement, state GF revenue collections far outpaced the forecast of 8.5 percent growth, generating 16.3 percent growth relative to FY 2021.  Payroll withholding and sales tax collections, major components of GF revenues, exceeded their forecasts, with payroll withholding growing at 9.5 percent (relative to 9 percent forecasted growth) and growth in sales tax collections, at 9.4 percent, surpassing the forecast of 6.5 percent.

Language in the recently-adopted biennium budget earmarks the first $585 million from these surplus revenues that is not required to meet a Constitutionally-mandated deposit to the state Revenue Stabilization Fund or the Water Quality Improvement Fund, as follows:

  • $250 million for a lump sum payment to the Virginia Retirement System to reduce unfunded liabilities
  • $150 million for improvements to Interstate 64 between exit 205 and exit 234
  • $50 million for the Virginia Business Ready Sites Program Fund
  • $100 million for capital projects
  • $35.5 million for deposit to the Major Headquarters Workforce Grant Fund

The following day, the Governor announced another piece of positive economic news for the Commonwealth, as Virginia’s unemployment rate fell to 2.8 percent in June.  According to the Virginia Employment Commission, relative to June 2021, the largest year-over-year job growth was experienced in leisure and hospitality, followed by education and health services.  All ten metropolitan areas saw job growth between June 2021 and June 2022, with the largest growth in Northern Virginia, followed by Richmond.  The Governor noted in his press release that the state’s labor force participation rate remained unchanged at 63.8 percent, and indicated that increasing this metric will be an area of focus for the Administration.

Several important economic indicators will be released this week, including Gross Domestic Product calculations for the second quarter and the Personal Consumption Expenditures Price Index, and all eyes are on the Federal Reserve Open Market Committee meeting on July 26 and 27.  After the July 13 release of the updated Consumer Price Index, which indicated that the CPI had increased by 9.1 percent for the 12 months ending in June, the largest 12-month increase since the period ending in November 1981, Committee members are expected to announce another interest rate increase to try to tame increasingly worrisome levels of inflation.

VACo Contact:  Katie Boyle

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