October General Fund revenues above forecasts

Governor Glenn Youngkin announced on November 15, 2022, the General Fund Revenue collections for October exceeded budget forecasts at a 10.3 percent year-over-year increase. On an unadjusted basis, general fund revenues increased by 3.0 percent for the month.

October revenues reflected the issuance of an additional $88 million in taxpayer rebates for Virginians allocated in Governor Youngkin’s first budget. Adjusting for these tax reductions, in the first four months of the fiscal year, general fund revenues were up 8.3 percent.

“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,” said Governor Glenn Youngkin. “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 national consumer confidence and employment growth.”

October marks the first month in which withholding tables were updated to reflect the previously authorized increase in the standard deduction. The impact of the increased standard deduction is expected to reduce withholding starting in October.

Year-over-year growth was driven by growth in payroll withholding, individual income non withholding collections, and sales and use tax revenues. Growth in sales tax collections primarily reflects the impact of heightened inflation, which is significantly impacting families.

“Wage growth and price inflation have supported tax collections so far this year,” said Secretary of Finance Stephen Cummings. “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 significantly impacts tax revenues.”

For the month, payroll withholding increased by 4.2 percent (8.2 percent after adjustments to withholding to account for the increase in the standard deduction). Wage growth and a strong labor market drove growth in payroll withholding.

There were 123,000 more Virginians employed in September 2022 than there were in September 2021, an increase of 3.0 percent year-over-year.

The full October 2022 revenue report is available here.