State sees historic 66.2% General Fund revenue increase in May

The state’s General Fund revenue rose 66.2% in May 2021 compared with May 2020, Gov. Ralph Northam announced Friday, the largest increase in more than 50 years. He also announced the appointment of the state’s new secretary and deputy secretary of finance.

May is usually a big month for revenue collections due to the state’s income tax collection for individuals and regular collections of withholding and sales taxes from businesses. According to the governor, more than 85% of May’s growth can be attributed to a return to normal tax filing dates. In 2020, the state delayed its May 1 income tax deadline to June 1, while this year, the deadline was May 17, aligning with the IRS due date.

Joe Flores, who has served as deputy secretary of finance in the Northam administration since 2018, was promoted to the top spot after last month’s announcement that former secretary Aubrey Layne was leaving to become chief of staff at Sentara Healthcare beginning in July. Carter Hutchinson, the new deputy secretary, has served as deputy policy director in the Northam administration since 2018.

“Virginia’s economy is roaring back to life thanks to hard work following the science and one of the strongest pandemic responses in the country,” Northam said in a statement. “New COVID-19 cases are at record lows, our vaccination rates are among the nation’s highest, and Virginians  are heading back to work — and these record revenue gains are the result. Our responsible governance is paying off, and we will keep this up as we approach a new budget year and face major decisions about how to best use federal funding from the American Rescue Plan. We have a strong team with the right experience — Joe Flores is a highly qualified, dedicated public servant with a deep understanding of the state budget and a strong background in fiscal policy, and I am confident our economic momentum will continue.”

Virginia’s General Fund revenue for May 2021 increased by 17.8% on a fiscal year-to-date basis, above the annual forecast of 2.7% growth.

Payroll withholding tax collections increased 13.8% during May, while sales and use tax collections (reflecting April 2021 sales) rose 37.5%.

“It has been a tremendous honor to serve the commonwealth and the Northam administration, and I have complete confidence that Virginia’s finances will be in good hands with Joe Flores at the helm,” Layne said in a statement. “May is a significant month for collections for non-withholding, with final payments for tax year 2020 and the first estimated payment for tax year 2021 both due at the beginning of the month. Last year, the filing date was extended to June 1 for both payments, and this year to May 17 for only the final payment, so the effect on the timing of collections is unclear.”

Corporate income tax collections increased 60.1% during May compared to May 2020, a jump from $82.3 million to $47.2 million.