Virginia finishes FY21 with record $2.6B surplus
Revenue collections surged 26.4% between April and June
Virginia reached the end of fiscal year 2021 with a $2.6 billion surplus, the largest in the commonwealth’s history, according to a statement released by Virginia Gov. Ralph Northam on Wednesday.
Total revenue collections grew 14.5% over fiscal year 2020, ahead of 2.7% growth projections.
State collections reached $8.6 billion in the final quarter of fiscal year 2021, which ended June 30. During June, state revenues decreased by $180.8 million, or 5.8%, compared to the previous year, which the governor’s office attributed to this year’s extension of the individual state income tax filing deadline to May 17.
“We have effectively managed Virginia’s finances through the pandemic, and now we are seeing the results — record-breaking revenue gains, a recovery that has outpaced the nation and recognition as the best place to do business,” Northam said in a statement. “Fueled by a surging economy, federal American Rescue Plan funds and the largest surplus in Virginia history, we have significant resources available to make transformational investments in this commonwealth. I look forward to working with the General Assembly in the fall to seize this opportunity so we can build a brighter future for all Virginians.”
All major general fund revenue sources exceeded their forecasts for the fiscal year, the statement said. Individual nonwithholding taxes accounted for about half of the surplus, although collections in payroll withholding, sales and corporate income taxes were also above their respective forecasts.
Based on preliminary data, nonwithholding income tax collections finished the year ahead of expectations, up 37.1%, mainly due to a 68% increase in final payments to the state Department of Taxation, according to the governor’s office. Estimated payments increased 19.8%.
Payroll withholding and sales tax collections, comprising 80% of total revenue, finished $560.2 million, or 3.3%, ahead of the forecast, based on preliminary data.
Corporate income tax collections increased 49.8% for the year, ahead of the annual forecast of 27.4%. A preliminary analysis of the data reveals a broad-based increase from larger corporations based on economic-related growth, according to the governor’s statement.
“We expected a strong revenue performance, and this surplus is even larger than initially anticipated,” Secretary of Finance Joe Flores said. “We are encouraged that for the fiscal year, payroll withholding and retail sales taxes increased by 6.4%, signifying that Virginia’s underlying economic foundation is strong.”
The commonwealth will release the final figures for fiscal year 2021 on Aug. 18 at the Joint Money Committee meeting between the Senate’s Finance and Appropriation Committee and the House of Delegates’ Appropriations and Finance committees.