The Governor announced this week that state General Fund (GF) revenues grew 1.1 percent relative to the previous year, due largely to continued strength in individual income tax withholding collections. On a fiscal year-to-date basis, collections increased by three percent, outpacing the annual forecast of 2.7 percent growth.
Individual income tax withholding, representing 63 percent of GF revenues, grew 0.8 percent relative to last August; however, last August included two additional deposit days, which somewhat skews month-over-month comparisons. On a fiscal year-to-date basis, individual withholding collections grew by 3.5 percent, ahead of the annual forecast of 1.8 percent growth.
Sales and use tax continues to be an area of concern, falling 1.3 percent in August due to several large refunds. On a fiscal year-to-date basis, sales tax collections have grown 1.1 percent, underperforming the annual forecast of 2.8 percent.
As noted in Secretary of Finance Ric Brown’s memorandum, August is not a significant month for revenue collections, as collections are largely comprised of sources with regular monthly payments, such as withholding and sales taxes; estimated payments for corporate income taxes and individual income tax nonwithholding are not due until September. Secretary Brown notes, “September collections will complete the first quarter of fiscal year 2018 and provide a clearer assessment of revenue growth.”
VACo Contact: Katie Boyle