February 2022 General Fund revenue collections support revised forecast

On March 11, 2022, Governor Youngkin announced that February revenue collections support the revised general fund forecast issued last month. Total general fund revenues fell 1.2 percent in February compared to last year’s unusually large number, as more refunds were issued this February due to last year’s delayed opening to the refund-processing season. February is not considered a significant month for revenue collections. On a fiscal year-to-date basis, total revenue collections rose 13.6 percent, ahead of the annual forecast of 9.2 percent growth.

“This revenue report supports the mid-session forecast, and reinforces the need for us to cut costs on families and strengthen Virginia,” said Governor Youngkin. “We have strong revenue forecasts that can fund tax cuts. With the highest gas prices on record and the highest inflation rates in decades, we have to provide relief for Virginians and we have the revenues to do it now.”

“This month provided no surprises since we announced the mid-session forecast last month. The key to the general fund revenue forecast remains the 4th quarter when individual income tax final payments are due on May 1,” said Secretary Cummings. “I am closely watching non withholding collections given its connection to a volatile stock market. However, I am confident that the revised revenue estimate provides sufficient cushion to meet the forecast.”

Collections of payroll withholding taxes decreased 1.3 percent in February. Collections of sales and use taxes, reflecting January sales, rose 7.9 percent in February. February receipts include January post-holiday sales and gift card purchases, completing the holiday shopping season, however, the severe winter weather could have delayed some purchases. The main tax return filing season began in February; the Department of Taxation issued $280.1 million in refunds compared with $217.0 million in February of last year. Through February, 595,000 refunds were processed compared with 486,000 last year.

On a year-to-date basis, collections of payroll withholding taxes – 56 percent of General Fund revenues – increased 9.7 percent ahead of the annual forecast of 9.0 percent growth. Sales tax collections – 17 percent of General Fund revenues – increased 14.8 percent through February, ahead of the annual forecast calling for an 11.4 percent increase. Recordation taxes advanced 0.5 percent on a fiscal-year-basis, ahead of the 4.3 percent decline in the annual forecast. Total revenues rose 13.6 percent through February, ahead of the annual forecast of 9.2 percent growth.

The full February 2022 revenue report is available here.