Virginia revenues up but job numbers fall in August

Virginia’s general fund revenues are running slightly ahead of the state’s expectations as the new fiscal year gets underway, although there are some signs of weakness in the state’s labor market.

The latest figures from the Virginia Department of Accounts show general fund collections increased by about 58 million dollars in August compared with August of last year.

For the first two months of the new fiscal year, Virginia has collected nearly 4-point-61 billion dollars in general fund revenue.

That’s an increase of about 5-point-4 percent from the same period last year, and roughly 81-and-a-half million dollars, or 1-point-8 percent, ahead of the state’s official forecast.

Governor Abigail Spanberger says revenue remains generally in line with expectations, but she says continued uncertainty in the national economy means the state needs to remain cautious.

One of the biggest sources of revenue growth has been sales and use taxes.

Those collections increased 4 percent in August from a year ago, and are up more than 9 percent so far this fiscal year. Sales tax collections are currently about 49 million dollars ahead of the state’s forecast.

Individual income taxes are showing a different trend.

Net individual income tax collections fell about 1-point-2 percent in August compared with last year. They are still up for the fiscal year, but are about 22 million dollars below projections.

Payroll withholding taxes were also down in August, falling about 1-point-9 percent from a year ago and coming in roughly 37 million dollars below the monthly forecast.

State Finance Secretary Mark Sickles says monthly withholding collections can normally vary from the forecast by 70 to 90 million dollars, so the August results remain within that typical range.

The revenue report also points to some concerns in Virginia’s job market.

The state lost about 9,600 jobs in July, and the June employment estimate was revised downward by another 1,900 jobs.

Virginia’s unemployment rate did improve slightly, falling from 3-point-8 percent to 3-point-7 percent in July.

The state’s labor force participation rate, however, slipped to 63 percent, which the report says continues a multiyear low.

Virginia’s budget calls for general fund revenue to reach nearly 34-point-7 billion dollars during the current fiscal year, an increase of about 4-point-1 percent from the previous year.