Virginia Anticipates $2.6 Billion Surplus

Date: July 15, 2021

Virginia finished the fiscal year on June 30 with almost $2.6 billion more in tax revenues than it had forecast in the state budget

Virginia finished the fiscal year on June 30 with almost $2.6 billion more in tax revenues than it had forecast in the state budget. Compared to the previous fiscal year, the state collected an additional $3.1 billion, growing by 14.5% instead of the 2.7% estimate in the budget.

 

Northam will work with the General Assembly in a special session that begins Aug. 2 to determine how to spend $4.3 billion in federal aid that Virginia has received under the American Rescue Plan Act. He will propose a new two-year state budget to the assembly on Dec. 16, the month before he leaves office.

 

The results will be preliminary until the books close later this month, but revenue collections show strength across the Virginia economy as the COVID-19 pandemic ebbs — in company payrolls, investor gains, real estate and housing, and consumer buying — both online and increasingly in brick-and-mortar stores.

 

Most of the surplus — the amount of revenues above the budget forecast — came from income taxes paid by self-employed professionals and investors on capital gains. It is the most volatile and least predictable source of state revenues, but it grew by $1.4 billion in the fiscal year compared to the previous 12 months.

 

But the state also collected more in two other critical categories — income taxes withheld from payroll, which reflect jobs and wages, and sales.

 

The Administration cautioned that Virginia lawmakers should not anticipate a huge windfall of revenues to spend in the two-year budget that Northam will propose in December for the next General Assembly to consider in the legislative session that will begin Jan. 12.

 

Once the surplus is certified, about half of it will be deposited in the Revenue Stabilization Fund — known as the rainy day fund — and Water Quality Improvement Fund, as required under the state constitution.

 

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