October 2014 General Fund Revenue Collections Up

October 2014 General Fund Revenue Collections Up 4.4% From The Previous Year And Fiscal-Year-To-Date Collections up 6.1%

~ All Major Sources Accounted for the Gain ~

RICHMOND - Governor McAuliffe announced that General Fund revenue increased 4.4% from the previous year with all major sources contributing to the increase. October is not a significant month in terms of general fund revenue collection but regular monthly collections are due in withholding, sales taxes, and most minor sources. Corporate and individual income tax extension return processing begins in October as corporate extension returns are due October 15 and individual extension returns are due November 1.  

In speaking about the revenue collections, Governor McAuliffe said, “We have been blessed with good revenue performance since the beginning of this fiscal year. While I welcome this trend, I remain cautiously optimistic as much uncertainty still exists. Our continued efforts to diversify and to build a new Virginia economy are vital to our ongoing financial health and they constitute the proper course to improve the long term performance of the Virginia economy.”

On a fiscal year-to-date basis, total revenue collections rose 6.1%, well ahead of the revised annual forecast of 2.9% growth. The main drivers of the revenue increase were the individual income tax, the corporate income tax, and sales tax.

With one less deposit day compared with last year, collections of payroll withholding taxes rose 3.4% in October.  October is not a significant month for collections in nonwithholding, however collections rose 12.5% in October from last year. Collections of sales and use taxes, reflecting September sales, rose 1.8% in October.  October corporate income tax collections include estimated payments from corporations with a February through January fiscal year, including many retailers. Collections of corporate income taxes were down $11.8 million in October, which compares favorably with receipts of negative $17.2 million in October of last year. Finally, collections of wills, suits, deeds, and contracts – mainly recordation tax collections – were $28.9 million in October, compared with $26.4 million in October of last year for growth of 9.5%. Following 13 consecutive months of negative growth, October marked the second consecutive monthly increase in this source.

On a year-to-date basis, collections of payroll withholding taxes – 64% of General Fund revenues -- increased 5.5%, ahead of the revised annual forecast of 2.7% growth. Year-to-date nonwithholding collections increased by 14.2% and ahead of the annual estimate of 6.3% growth. Sales tax collections – 19% of General Fund revenues – increased 3.8% through October, ahead of the annual forecast calling for a 4.4% increase. Through the first four months of the fiscal year, corporate income tax collections have grown 16.6% from the same period last year, ahead of the annual estimate of a 0.9% decline.

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Construction Begins for Amtrak Service to Roanoke

~ Northeast Regional service expanding in Virginia ~

RICHMOND –  Governor McAuliffe announced that the Commonwealth of Virginia, Amtrak, Norfolk Southern and the City of Roanoke are beginning the first phase of construction for the platform that will serve intercity passenger rail service to the Star City.

Amtrak service to the city will be an extension of the successful Northeast Regional train from Lynchburg and is anticipated to start in 2017. The service will provide a same-seat trip from Roanoke to Lynchburg, Washington, D.C., Baltimore, Philadelphia and cities as far north as Boston. 

“Bringing passenger rail service back to Roanoke will be an enormous economic driver for the region and the entire Commonwealth,” said Governor McAuliffe. “I look forward to working with the parties involved to get this project completed so that Virginia families and our economy can benefit from this expanded service as soon as possible.” 

It has been 34 years since intercity passenger rail service has served Roanoke.

“Construction is a major development in our efforts to bring Amtrak service to Roanoke,” said Jennifer Mitchell, Director of the Virginia Department of Rail and Public Transportation.“This new service is an example of the significant expansion of the Commonwealth’s passenger rail service. I appreciate the commitment of Amtrak, Norfolk Southern and the City of Roanoke to make this new service a reality.”

Virginia continues its ongoing commitment to congestion mitigation by offering the public alternate transportation choices to driving on congested highway corridors like I-81, Route 29, I-95, and Route 460 while expanding mobility and increasing connectivity for travel throughout the regions served by and along the Northeast Corridor.

“There is high demand for passenger rail service in Virginia as demonstrated by considerable ridership growth throughout the Commonwealth,” said Jay McArthur, Amtrak Principal Officer, State Partnerships. “We have developed a strong partnership with the Commonwealth and look forward to Roanoke as another service expansion in Virginia’s successful rail program, providing passengers with a convenient and pleasant service to Washington and other Northeast Corridor destinations.”

Roanoke is the latest step for Virginia to lead the way as one of the few states in the country to successfully negotiate the addition of new intercity passenger rail service in major rail corridors, balancing freight and economic development needs with additional intercity passenger rail options.

“Norfolk Southern and DRPT have a track record of success in implementing passenger service in Virginia,” said James A. Hixon, Executive Vice President, Law and Corporate Relations, Norfolk Southern Corporation. “We have made investments in our network, here in Roanoke and across the state, to ensure that passenger service is done safely and efficiently.”

“Given our history as a railroad town, the return of passenger rail is very exciting for the citizens of Roanoke,” said Roanoke Mayor David A. Bowers. “We are thrilled to see this initiative move forward, and anticipate the time when passenger service will once again be available to those who want to make connections, both inside and outside The Star City.”

(Never mind improving highways or building better roads.  Never mind the high fuel prices.  Traffic is actually down yet congestion is up?  How does that work?)

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September 2014 General Fund Revenue Collections Up 5.3% From Previous Year Fiscal-Year-To-Date Collections up 6.7%

English: (Photo credit: Wikipedia)

All Major Sources Accounted for the Gain

RICHMOND - Today, Governor McAuliffe announced that the September General Fund revenue increased 5.3% from the previous year with all major sources contributing to the increase.  This is the first time revenues have increased for three consecutive months since April-June of 2013.  The Governor also stated that September completes the first quarter of fiscal year 2015 and is a significant month for revenue collections. Estimated payments from individuals, corporations, and insurance companies are all due in September, along with regular monthly collections in withholding, sales taxes, and other sources.

“I am pleased to see that our revenue collections are up, however, we must remain cautious because the Commonwealth has only collected about one-quarter of its general fund revenue estimate to date. My administration will continue to take a prudent approach to help ensure that Virginia remains fiscally strong,” said Governor McAuliffe.

On a fiscal year-to-date basis, total revenue collections rose 6.7%, well ahead of the revised annual forecast of 2.9% growth.  The main drivers of the revenue increase were the individual income tax, the corporate income tax, and sales tax.  With an additional deposit day compared with last year, collections of payroll withholding taxes rose 8.3% in September. September is a significant month for collections in non-withholding, since the first estimated payment for fiscal year 2015 is due.  Collections rose 2.8% in September from last year.  Collections of sales and use taxes, reflecting August sales, rose 3.5% in September. As with non-withholding, September is a significant month in corporate income tax collections, since the first estimated payment for the fiscal year is due in September.  Collections of corporate income tax grew 6.9% in September from September of last year.  Finally, collections of wills, suits, deeds, and contracts – mainly recordation tax collections – were $26.4 million in September, compared with $25.9 million in September of last year.  The 1.9% growth in September ended 13 consecutive months of negative growth. 

On a year-to-date basis, collections of payroll withholding taxes – 64% of General Fund revenues -- increased 6.3%, ahead of the revised annual forecast of 2.7% growth.  Year-to-date non-withholding collections were $427.7 million compared with $372.8 million in the same period last year, rising by 14.7% and ahead of the annual estimate of 6.3% growth.  Sales tax collections – 19% of General Fund revenues – increased 4.6% through September, ahead of the annual forecast calling for a 4.4% increase.  Through the first quarter of the fiscal year, corporate income tax collections have grown 12.4% from the same period last year, ahead of the annual estimate of a 0.9% decline.

Read the full report here.

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Fiscal Year 2014 General Fund Revenue Collections Down 1.6% From Fiscal Year 2013 And $439 Million Below Forecast

The Timing of Nonwithholding Payments in Response to Federal Budget 

Uncertainty Drives the Shortfall

RICHMOND- Governor McAuliffe announced  that preliminary figures indicate the state concluded Fiscal Year (FY) 2014 with an approximately $438.5 million shortfall in general fund revenue collections, excluding transfers.

Total general fund revenue collections declined by 1.6 percent in FY 2014, behind the revised revenue forecast of 1.0 percent growth. This marks the first time that Virginia revenues have declined outside of a national recession. 

The main driver of the revenue decrease was a large drop in nonwithholding payments.  Despite record-breaking increases in the stock market, it appears that the uncertainty about the federal Fiscal Cliff in December 2012/January 2013 shifted more realized capital gains from 2013 into 2012 than expected.  Revenue collections during the last quarter of each fiscal year are significant in this regard because upper income individuals who have a significant portion of their income based on capital gains pay a substantial portion of their tax liability in the April to June period.

A comprehensive breakdown of the preliminary FY 2014 revenue shortfall is shown below.  The final FY 2014 tally will not be available until mid-August. 

Analysis of Fiscal Year 2014 Revenues

Based on Preliminary Data

• Total general fund revenue collections fell short of the official forecast by $438.5 million (-2.7 percent variance).
  • Total general fund revenues declined 1.6 percent compared with the forecast of 1.0 percent growth.
• The revenue shortfall is primarily due to a large drop in individual nonwithholding collections. That source, which is made up on non-wage income (mainly capital gains), was $401.1 million off the mark.
• Payroll withholding and sales tax collections, 83 percent of total revenues and the best indicator of current economic activity in the Commonwealth, also fell short of the forecast by $78.9 million, a forecast variance of -0.6 percent.
  • Estimates for these two sources are directly tied to the economic outlook developed during the fall forecasting process, and specifically, the outlook for jobs and wage income in the Commonwealth.
  • The general weakness in withholding and sales tax collections over the last several quarters is indicative of the negative effect that federal government spending cuts are having on the Commonwealth.

ADDITIONAL DETAILS

• Individual income tax withholding, 64 percent of total general fund revenues, was below the estimate by $66.0 million (-0.6 percent variance).
  • Annual collections increased 2.3 percent compared with the forecast of a 2.9 percent increase.
• Individual income tax nonwithholding collections, 15 percent of total revenues, fell 10.1 percent in fiscal year 2014 reversing the 19.1 percent gain in FY 2013, despite a record-level stock market increase in both years. Total nonwithholding collections fell short of the annual estimate by $401.1 million (-14.3 percent variance).
• Individual refunds finished $51.3 million (-3.0 percent variance) below the annual estimate, a net positive for the Commonwealth.
• Taken together, withholding, nonwithholding, and refunds, i.e. net individual income taxes, fell 0.8 percent, behind the annual forecast by $415.7 million, a forecast variance of 3.7 percent.
• Sales and use tax collections, 19 percent of total revenues, fell short of the annual estimate by $12.9 million (-0.4 percent variance).
• Corporate income tax collections, 5 percent of total revenues and one of the most volatile revenue sources, declined by 4.9 percent, compared with the forecast of a 3.4 percent decline.
• Wills, Suits, Deeds, and Contracts (primarily recordation tax collections), 2 percent of total revenues, finished the year $66.7 million (-17.7 percent variance) behind the annual projection of no growth.

Insurance premiums tax, 2 percent of total revenues, exceeded the annual estimate by $31.0 million (11.8 percent variance).

Our Notes;  Glad to see the economic recovery is in full swing.  ????

Letter from the President -- FY 2015 Budget Amendments

Seal of the Office of Management and Budget of the US Government (Photo credit: Wikipedia)

TEXT OF A LETTER FROM THE PRESIDENT

TO THE SPEAKER OF THE HOUSE OF REPRESENTATIVES

June 26, 2014

Dear Mr. Speaker:

I ask the Congress to consider the enclosed Fiscal Year (FY) 2015 Budget amendments for the Department of Defense (DOD) and the Department of State and Other International Programs (State/OIP) to fund Overseas Contingency Operations (OCO). These amendments would provide $58.6 billion for DOD OCO activities, which is $20.9 billion less than the $79.4 billion placeholder for DOD OCO in the FY 2015 Budget. It would also provide $1.4 billion for State/OIP OCO activities, which is in addition to the $5.9 billion for State/OIP included in the FY 2015 Budget. Overall, these amendments would decrease the total OCO funding requested for FY 2015 by $19.5 billion.

Final decisions about the number and activities of U.S. forces in Afghanistan after December 2014 had not yet been made at the time the FY 2015 Budget was submitted. As a result, the Budget included a placeholder for DOD FY 2015 OCO funding equivalent to the amount requested in the FY 2014 Budget. The Administration noted in the FY 2015 Budget that after determining required force levels in Afghanistan, a Budget amendment updating the OCO request would be submitted to the Congress. The enclosed amendments include the necessary updates to the OCO request in order to fund military operations in Afghanistan, a significant portion of the U.S. military presence around the Middle East, the Administration's proposed Counterterrorism Partnerships Fund and European Reassurance Initiative, and State/OIP peacekeeping costs in the Central African Republic.

The details of these amendments are set forth in the enclosed letter from the Acting Director of the Office of Management and Budget.

Sincerely,

BARACK OBAMA

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General Fund Revenue Collections Increased 7.8% in March

An assortment of United States coins, including quarters, dimes, nickels and pennies. (Photo credit: Wikipedia)

Solid Gains Occurred in Individual Nonwithholding, Corporate Income Tax and the Insurance Premiums Tax

 RICHMOND- Governor McAuliffe announced today that general fund revenue collections increased 7.8 percent in March, with solid gains in individual nonwithholding, corporate income tax and the insurance premiums tax.  On a year-to-date basis, total revenue collections were flat through March, lagging the annual forecast of 1.0 percent growth. 

Speaking about this news, Governor McAuliffe noted that March is not a significant month for revenue collections, in general.  However, he added “March revenues reverse the negatives of the last two months and have us now moving in the right direction.  From the very beginning of our budget deliberations, all involved have assumed that general fund revenue collections in the last quarter of fiscal year 2014, especially estimated and final payments of individual income taxes, would be key for the Commonwealth.  The revenue data for March, being released today, represent a step in the right direction toward realizing our budget estimates.  Longer term, we must continue to place a priority on creating jobs and diversifying our economy.  This is my highest objective and I will work diligently toward that end.”

Collections of payroll withholding taxes grew 0.8 percent in March.  Although not a significant month for individual nonwithholding and corporate income tax collections, these sources increased respectively by 17.7 percent and 35.1 percent.  Final payments from insurance companies for tax year 2013 were due in March.  The insurance premiums tax totaled $31.6 million and increased by 126.5 percent.  Collections of sales and use taxes, reflecting February sales, fell 4.2 percent in March – the weakness is due in part to the weather.  Finally, recordation taxes from real estate transactions were down 29.9 percent as severe winter weather dampened home sales. 

Collections of payroll withholding taxes – 63 percent of General Fund revenues -- increased 2.7 percent through March, slightly behind the annual forecast of 2.9 percent growth.  Sales tax collections - 18 percent of General Fund revenues – have declined 4.8 percent through March, trailing the annual forecast calling for a 4.4 percent decline.  Adjusting for the accelerated sales tax program and the 0.125 percent sales tax transfer required by the provisions of HB 2313, total revenues grew 1.1 percent through March, trailing the adjusted forecast of 2.1 percent growth. 

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Governor McAuliffe Signs Caboose Budget Bill

English: Photo of the Virginia State Capitol before renovations. (Photo credit: Wikipedia)

Virginia Governor Terry McAuliffe released the following statement today after signing House Bill 5001, the Caboose Budget Bill, which funds state government through the remainder of this fiscal year:

“Today I signed a budget bill that funds state government for the remainder of the year, and proves that Democrats and Republicans in the General Assembly are capable of working together to get things done for the Virginians who sent them to Richmond.

“This budget is the product of earnest negotiations between Democrats and Republicans in the General Assembly, with whom I was pleased to work to ensure that a final product came to my desk that I could sign.

“This budget is a compromise – it is not perfect. Today I signed it over reservations that I have expressed to Republicans and Democrats in the legislature about spending over $300 million on a new General Assembly building at a time when some legislators continue to refuse to use our own tax dollars to close the health care coverage gap.

“As negotiations on the next biennial budget move forward, I hope those legislators will recognize the message their actions send to 400,000 Virginians who need access to health care, not a new building for 140 state legislators.

“The bill I signed today is proof that the General Assembly is capable of negotiating and passing a budget that reflects the varied values and political views of its members and their constituents. There is no reason that the House and Senate cannot bring that same approach to the biennial budget I introduced last week. The sooner the General Assembly puts politics aside and negotiates a way forward, the sooner we can end this gridlock, close the health care coverage gap and give Virginians the budget they deserve.”

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Governor Announces Mid-Session Revenue Reduction of $140 Million

Terry McAuliffe (Photo credit: mou-ikkai)

Governor Announces Mid-Session Revenue Reduction of $140 Million

Due to Weak January and Year-To-Date Revenue Collections;

Offers Budget Actions to Cover Reduced Revenue Growth

RICHMOND- Today, Governor Terry McAuliffe briefed House and Senate budget committee leaders on the preliminary mid-session revenue reforecast numbers. This review involves an analysis of two elements: updated economic information and actual revenue collections for the first seven months of the current fiscal year, which started July 1, 2013. The Governor offered several budget solutions to cover the reduced revenue growth that was projected.

“Although our underlying economic forecast has not changed, it is clear that the current revenue receipts warrant caution,” said Governor McAuliffe. “In order to remain prudent, we must adjust our revenue estimates downward, which will help reduce future risks. After consulting with my economic team, it is my recommendation that we reduce the general fund revenue estimates for fiscal year 2014 by $125 million and the general fund revenue estimate for fiscal year 2015 by $15 million.” 

Total general fund revenue collections fell 5.9 percent in January with declines in all major sources except corporate income tax. On a year-to-date basis, total revenue collections fell 0.5 percent through January, lagging the annual forecast of 1.7 percent growth.  Total revenues are tracking behind the forecast due to declines in individual withholding, and non-withholding, and recordation taxes. In January, receipts for individual non-withholding declined by 25.3 percent and withholding (the State’s largest general fund revenue source) declined by 1.9 percent.  Recordation tax collections declined by 33.3 percent in January. 

These results are important as January is a significant month for revenue collections from individual estimated payments, sales taxes on December sales and corporate income taxes from large retailers. This combined with an analysis of the underlying economic fundamentals in the economy and revenue models forms the basis for the annual mid-session revenue reforecast presented to the 2014 General Assembly. Since December 16, the economic fundamentals on which the December forecast is based have not changed and continue to point to modest economic growth.

However, through January, fiscal-year-to-date revenue collections have declined by 0.5%  -- or 2.2% below the annual December estimate of a 1.7% increase.  The revenue sources that have underperformed the most have been individual non-withholding and the corporate income taxes  – both very volatile sources of revenue.  Given the performance to date in all sources, combined with the difficulty in forecasting individual non-withholding receipts in April and May, the Governor is recommending that the prudent step is to reduce the December forecast by $125.0 million in FY 2014 and $15.0 million in FY 2015.  General fund revenues are now expected to increase 1.0 percent in FY 2014 as compared to the 1.7 percent increase in the December forecast.

Given the timing of this mid-session reforecast, which occurs just in advance of the House and Senate money committees reporting out their respective versions of the budget on Sunday, the Governor further offered select budgetary actions to address the change in revenues. 

“It is my sincere hope that these budget actions will help the House and Senate in their respective budget deliberations in light of the timing of the lower revenue forecast I am recommending today,” said Governor McAuliffe.

There were eight budget adjustments that Governor McAuliffe proposed to address the lower revenue projections (see attachment).  None of these adjustments impact core services or entitlements. 

These adjustments include:

o   The elimination of the FY 2016 estimated payment to the revenue stabilization fund,

o   Use of additional Lottery revenues,

o   Capturing uncommitted balances across the budget, and

o   Reducing the unappropriated balance from $51 million to $11 million. 

BACKGROUND

The FY 2016 payment into the revenue stabilization fund is based upon revenue growth in FY 2014. Since the majority of the revenue decline, $125 million, is applied to FY 2014, the entire required deposit of $59.9 million in FY 2016 is eliminated and no longer needed.

While general fund revenues are being adjusted downward in FY 2014, Lottery revenues are expected to exceed the previous forecast by $15.5 million.  The Chairman of the Lottery Board notified the Governor in writing this week that due to low prize payouts and significant sales through the first half of the fiscal year, largely associated with a very high Mega-millions jackpot, the net proceeds available for public education are projected to increase by $15.5 million. This additional Lottery revenue can be used to offset general fund expenses in public education with no reduction in services.

In addition to the excess lottery balances, the Governor has also identified balances in the Literary Fund that may be used to offset general fund teacher retirement costs, balances from unclaimed accounts previously held by a former state agency that may now be deposited to the general fund, and appropriation balances in other programs that are not going to be needed. 

The other program balances that will not be needed and whose appropriations can now be reverted or deposited to the general fund including the Federal Action Contingency Trust (FACT) fund, some economic development fund balances, and some pilot education program balances.

Finally, the remainder of the gap will be closed by reducing the unappropriated balance by approximately $40 million, from $51 million as it was in the introduced budget to $11 million.  The large unappropriated balance was intended to offset potential revenue losses so this adjustment is in line with its intended purpose.

January 2014 revenue letter, State of Virginia from Chuck Thompson

January 2014 revenue data, State of Virginia from Chuck Thompson

The above PDF's are the attachments that were included with the original source of the story at the Governor's office.

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