State Treasury Brings In More General Fund Revenues Than Projected

by Dick Hall-Sizemore

Some commenters on this blog have expressed serious concern about the choices facing Governor Youngkin this fall in the development of his recommended amendments to the state’s two-year budget. They cite the prospects of recession and the uncertainty created by such prospects. They can rest a little easier for now.

The Secretary of Finance has informed the Governor that the Commonwealth’s first quarter general fund revenues for the current fiscal year are $500 million ahead of projections, or 7.6%. In September alone, after adjusting for timing differences, “total general fund revenues increased 10.7 percent for the month compared to a year ago.”

The Secretary’s transmittal letter and details can be found here. One feature of these documents that may be a little confusing at first glance is the frequent reference to declines in revenues. What one needs to keep in mind is that the General Assembly, in the adoption of the 2022-2024 biennial budget, assumed a 14% decrease in general fund revenues in FY 2023 compared to FY 2022. This projected decrease was based on the adoption of tax reductions. The actual revenues for the first quarter were less than for the same period last year, but only 5% less, rather than 14% less. Quite encouraging are a 9.2% increase in individual income tax revenues for the first quarter, along with a 20.3% increase in sales tax revenues.

In his transmittal letter, Secretary of Finance Stephen Cummings declared “revenue collections for the remaining nine months of fiscal year 2023 can decline 16.4% year-over-year, or $3.8 billion, and still meet projections assumed in the current appropriation act.” 

Cumming apparently does not think that is likely to happen. He recently told the Richmond Times-Dispatch that he anticipates a “mild recession” with the economy losing ground by the end of the calendar year but starting to recover in the spring. That prediction is in sharp contrast to the sharper recession some national financial figures are predicting. Perhaps Cummings is trying to be proactive to head off any objections to the additional tax cuts that his boss, Governor Youngkin, wants.