State General Fund revenues continued to perform well in April, which Secretary of Finance Stephen E. Cummings characterized as a “solid month” for revenue collections in his remarks to the House Appropriations Committee on May 28. Although total General Fund revenues declined by 1 percent in April, revenues outperformed expectations for the month by $162.6 million; total General Fund revenues have increased by 5 percent on a fiscal year-to-date basis, relative to last year, and are ahead of projections in the December 2023 introduced “caboose” FY 2024 budget by $1.22 billion, or 5.4 percent. (In May’s revenue report, comparisons will be made to the revised FY 2024 forecast that was incorporated into the budget that was signed in May, which assumes an additional $546.8 million in General Fund revenues.) Secretary Cummings expressed the Administration’s continued confidence in its revenue forecast in the near term, but highlighted some risk factors and signs of softening in the economy that will need to be monitored closely.
Individual income tax withholding collections were up by 8.3 percent in April relative to last year (although approximately 1 percentage point is attributable to extra deposit days this year), and are ahead of the December 2023 forecast by 3.8 percent, or $502.3 million, on a fiscal year-to-date basis. Individual income tax nonwithholding collections are down 9.5 percent in April and 3.9 percent for the year, but are $441.6 million ahead of the forecast on a year-to-date basis, assuaging concerns that had been raised earlier in the year when January collections unexpectedly plunged by 27.5 percent. Secretary Cummings’s presentation notes that nonwithholding collections are “very likely to finish in line with or above projections” for the year. Sales tax collections dropped by 0.1 percent in April relative to last year, and are down by 1 percent year-to-date, but are ahead of the forecast by 3.3 percent, or $125.4 million, on a fiscal-year-to-date basis.
Corporate income tax collections, which are often volatile, dropped by 7.6 percent in April relative to last year, and are $134.2 million behind projections year-to-date. Secretary Cummings explained that this decline is largely attributable to the processing of a backlog of corporate returns that were under review from previous years.
Secretary Cummings discussed several areas of concern in his presentation. Inflation remains above the Federal Reserve’s 2 percent target; the core personal consumption expenditures price index (the Federal Reserve’s preferred measure of inflation, which excludes the volatile food and energy categories) was 2.8 percent in March (and was unchanged in April, as announced on May 31). Job growth was modest in Virginia in April (a growth of 3,400 jobs) after a large increase in March (18,200), similar to the national trend. Nationally, the personal saving rate is now lower than it was prior to the pandemic, and the percentage of credit card balances that are past due is higher than pre-pandemic levels.
The April revenue report may be found at this link and Secretary Cummings’s slides from May 28 may be found at this link. House Appropriations Committee members also received a briefing on the Virginia Military Survivors and Dependents Education Program and an update on the consolidation of workforce development programs into the new Virginia Works agency.
VACo Contact: Katie Boyle