Governor McAuliffe announced on November 14 that state General Fund (GF) revenues continued to deliver a strong performance in October, growing by 7.7 percent. On a fiscal year-to-date basis, total revenue collections are up 4.9 percent, running well ahead of the annual forecast of 2.7 percent growth.
Secretary of Finance Ric Brown’s memorandum notes that October’s revenue growth was attributable to continued strength in individual income tax withholding, sales tax, and corporate income tax. Individual income tax withholding, representing 63 percent of GF revenue, grew 4 percent in October and has also grown 4 percent on a year-to-date basis, outpacing the annual forecast of 1.8 percent. Sales and use tax collections grew 9 percent in October and have increased by 4.5 percent on a year-to-date basis, well ahead of the forecast of 2.8 percent growth. Sales tax collections had underperformed in FY 2017 and had been lagging the forecast earlier in FY 2018, so October’s robust performance, following healthy growth in September, is an encouraging sign.
The Governor will present his FY 2018 “caboose” budget and his proposed budget for the upcoming biennium on December 18. The biennium budget will incorporate GF revenue projections based on recommendations by the Governor’s Advisory Council on Revenue Estimates, which will meet on November 20.
In his discussions with VACo’s Board of Directors and the Finance Steering Committee at VACo’s annual conference, Secretary Brown was cautiously optimistic about the upcoming budget. He pointed to continued strength in revenue collections as a positive development, but noted that there are several elements of uncertainty complicating efforts at future planning, including whether the national economy is overdue for a downturn and the possibility of another round of federal sequestration in the future.
VACo Contact: Katie Boyle