First Quarter General Fund Revenues exceed forecasts

RICHMOND, VA — Governor Glenn Youngkin announced the General Fund revenue collections for September, the final month in the first quarter of the Fiscal Year 2023, exceeded budget estimates. September revenues reflected the nearly $900 million of tax rebates delivered to Virginians in recent weeks as a result of Governor Youngkin’s first budget. In addition to the tax rebate, year-to-date revenues reflect the repeal of the Accelerated Sales Tax (AST), which took effect in June.

Adjusting for these tax reductions, first-quarter general fund revenues were up 7.6 percent and 10.7 percent in September.

“Adjusted for the impacts of planned policy actions, including the historic tax rebates of nearly $900 million recently delivered to Virginians, September revenue collection increased more than 10 percent compared to a year ago,” said Governor Glenn Youngkin. “September is a typically strong month for revenues, and this year was consistent with that precedent. At the same time, economic data remains mixed, the job market shows stability, but the persistent inflation from misguided efforts in Washington continues to be the silent thief stealing more and more from the paychecks of hardworking Virginians.”

“First quarter collections exceeded budgeted revenues by more than $500 million, reflecting the continued strength in Virginia jobs and wages. Consumers are continuing to spend, and estimated payments for non withholding income were consistent with last year’s pace,” said Secretary of Finance Stephen Cummings. “However, continued high inflation and rapidly rising interest rates are beginning to impact some key economic indicators, and the Administration is continuously monitoring other metrics which provide further caution for the current outlook for our economy. As we begin the annual revenue forecasting process for the budget to be delivered by the Governor in December, we will continue working with JABE and GACRE to deliver a forecast that will be the basis for a fiscally sound budget”

For the month, payroll withholding increased by 0.3 percent (11.0 percent adjustment for the timing of deposit days). Wage growth and a strong labor market drove growth in payroll withholding. There were 128,000 more Virginians employed in August 2022 than there were in August 2021, an increase of 3.1 percent year-over-year. Virginia, however, has yet to recover more than 118,000 jobs that were lost during the pandemic (now at 97.2 percent of pre-pandemic levels), while our key competitor states have all exceeded pre-pandemic employment levels.

The full September 2022 revenue report is available here.