CONSISTENTLY DELIVERS

Oct 20, 2009

Virginia State Budget Shortfall

 

 
The October revenue report released this week by the Virginia Secretary of Finance yielded little bright news, with tax collections lagging the previously negative estimates that suggested a 1.2 percent decline in revenues.
 
FY 10 first quarter revenue collections are 7.4 percent below where they were at the end of the first quarter of the previous year. The Secretary reported that “all major sources are trailing their forecasts through the first quarter of fiscal year 2010.” Virginia’s 2010 fiscal year runs from July 1, 2009 through June 30, 2010.
 
Monthly Virginia individual income tax collections actually rose by four percent compared to September 2008, but through the end of the first quarter they are down by 2.3 percent, about a $50 million decline.
 
Estimated and non-withholding income tax payments were down over 23 percent for the year, whereas they were only expected to fall by under 17 percent. This represents over a $90 million shortfall year over year.
 
Virginia sales tax collections are down by almost 6 percent for the year, compared to an estimated decline for the year of less than one percent. This is about $45 million less than was collected last year through the end of the first quarter of FY09.
 
However, Virginia lottery profits appear to be growing, increasing by 5.4 percent year-to-date compared to 2009.
 
Governor Kaine announced significant cuts in September to address the Virginia state budget shortfall in the FY 2010 budget. He will submit additional cuts to the Virginia budget in mid-December for 2010, as well as release the proposed biennial budget for FY 2011 and 2012. These will be addressed, reviewed and amended by the new Governor and the 2010 General Assembly in January.