~ March General Fund revenue collections are up 10.8% from the previous year and fiscal year-to-date collections are up 6.6%, revenues do not reflect anticipated reduction from business closures ~
RICHMOND—Governor Ralph Northam today announced March revenue results and cautioned that future reports will reflect significant economic impacts due to COVID-19.
Payroll withholding and individual income tax payments began to see a slowdown in the number of firms or individuals reporting late in the month. An unknown number of dealers took advantage of the sales tax due date extension from March 20 to April 20.
“While March collections reflected our strong economy, April revenues will begin to reveal the effects of COVID-19 on payroll withholding and retail sales tax collections,” said Governor Northam. “The most important thing to focus on right now is the health and safety of all Virginians, and we expect the April results will be disappointing.”
While March is not a significant month for collections, revenue increased 10.8 percent. Most of the increase is the result of fewer refunds being issued, due to normal processing this year as compared to last year’s delayed processing of the filing season. Collections of sales and use taxes, reflecting February sales, rose 7.9 percent in March. All of the growth is due to new Wayfair-related use tax dealers.
“As always, the fourth quarter collections will be highly dependent on individual estimated and final payments,” said Secretary of Finance Aubrey Layne. “With the COVID-19 outbreak affecting employment and businesses, payroll withholding and retail sales tax will be closely monitored as we expect them to decline by approximately $1 billion in the final quarter of our fiscal year.”
The last three months of the fiscal year are significant collections months. In addition to estimated and final payments from both corporations and individuals due in April and May, now allowed to be paid by June 1 per Governor Northam’s direction, estimated payments are again due in June.
On a year-to-date basis, collections of payroll withholding taxes—62 percent of General Fund revenues—increased 4.8 percent ahead of the same period last year, and are slightly ahead of the estimate of 4.7 percent growth. Sales tax collections—17 percent of General Fund revenues—increased 8.4 percent, and are above the annual estimate of 7.4 percent growth.
On a fiscal year-to-date basis, total revenue collections rose 6.6 percent in March, ahead of the annual forecast of 3.2 percent growth.