Virginia’s tax revenues four months into fiscal year 2023 are down 3.1 percent compared to fiscal year 2022, although when adjusted for timing and $250 tax rebates sent to Virginians, revenues are up 8.3 percent compared to the previous year, according to a presentation Secretary of Finance Stephen Cummings prepared to share with legislators.
Adjusted for $88 million paid out in October as part of the rebates, Virginia’s October revenues hit a 10.3 percent year-over-year increase, ahead of forecasts.
“With the impacts of planned policy actions, including the historic tax rebates of nearly $900 million recently delivered to Virginians, October revenue collection increased more than 10 percent compared to a year ago,” Governor Glenn Youngkin said in a press release. “Recent economic data remains mixed and we’re closely monitoring consumer indicators like sales and use revenues whose upward trends are unlikely to continue long-term. The impact of sustained inflation and misguided actions out of Washington have undermined consumer confidence and employment growth nationally.”
Cummings also noted that another tax relief measure, increasing the standard deduction from $4,500 to $8,000 for individuals, is likely to impact withholding revenues beginning in October by $50 million per month. But withholding in October was still up 4.2 percent from FY 2022.
In August, the governor said he plans to call for $397 million in additional tax relief in his request for updates to the current biannual budget, due to be presented December 15.
Cummings is continuing to sound a note of warning about economic decline. His presentation notes that Federal Reserve rate hikes, along with inflation, are expected to impact the economy.
“Recent economic data are mixed with continued job growth, albeit at lower levels, and continued high inflation, rising interest rates and lower consumer confidence,” he wrote in a report to Youngkin.
“Aggressive actions by the Federal Reserve to halt inflation are likely to result in an economic downturn that will place meaningful risk to revenues in Q3 and Q4 of the current fiscal year,” his presentation states.
“Wage growth and price inflation have supported tax collections so far this year,” Cummings said in Youngkin’s press release. “However, changing economic conditions and Fed policy are heightening our concerns about growth in the second half of the fiscal year. Aggressive actions by the Federal Reserve to halt inflation are likely to result in an economic downturn that [will] significantly impact tax revenues.”
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Eric Burk is a reporter at The Virginia Star and The Star News Network. Email tips to [email protected].
Photo “Virginia State Capitol” by Ken Lund. CC BY-SA 2.0.
