Last week, Governor Ralph Northam announced revenue numbers
for Virginia’s General Fund through April 2020. A detailed
breakdown of the financial numbers was given to the House Committee on Appropriations
and Senate Committee on Finance and Appropriations on May 18th and
19th by Secretary of Finance Aubrey Layne.
Due to the COVID-19/Coronavirus pandemic, the Commonwealth
saw dramatic reduction in state revenues for the month of April. Layne told committee
members the decrease reflects the Governor’s decision to delay individual and
corporate income tax payment deadlines until June 1, 2020.
When comparing Virginia to other states, Layne added the
Commonwealth’s economy has sectors that have shown resiliency boosted by
individuals who work in industries that allow for remote or telework and those
who are employed by the federal government/federal contract workers, especially
in Northern Virginia and the Hampton Roads region.
Additionally, the monetary
policy response to the pandemic by the Federal Reserve and stimulus measures passed
by Congress have impacted the Virginia economy since March.
Layne informed the committees that the next two-to-three
months will provide budget forecasters with better data as they look at the
overall impact of the pandemic on the state budget and economy. It is assumed
the legislature will return to Richmond at some point during the late summer or
early fall for a special session to address the biennium budget. Layne said he
could provide a better forecast for the biennium in the next 60-70 days which
will assist lawmakers during the special session to adjust the budget.
Key Fiscal numbers from Secretary Layne’s presentation
include:
- General Fund (GF) revenues declined by 26.2 percent in April.
- Declines in individual income tax non-withholding – a drop of 61.8% in April and 19.3% on a year-to-date basis – account for most of the April reductions. Some losses will likely be recouped in the coming weeks as payments are made in advance of the deferred June 1 deadline.
- Individual income tax withholding collections for 2020 remain on forecast for 4.7 percent annual growth.
- Sales tax collections in April, which reflect March sales, fell 0.4 percent.
- The $1 billion projected loss in General Funds for FY 2020 appears to be on par with prediction made by Secretary Layne in March when the Governor announced closures of nonessential businesses.
To view the presentation from this week's hearings click here.
