Commonwealth of Virginia Office of Governor Bob McDonnell PRESS RELEASE
Commonwealth Posts 15.7 Percent Revenue Increase in October
Significant Federal Uncertainty Overshadows Current Gains and Calls for Preparations for Possible Decline in Revenues
RICHMOND — Governor Bob McDonnell announced today that total general fund revenue collections rose by 15.7 percent in October, primarily due to growth in individual withholding, non-withholding and corporate income tax payments. Two additional deposit days in October 2012, which is typically not a significant month for revenue collections, compared to October 2011 also contributed to the growth.
Comparing October 2012 to October 2011, collections of payroll withholding taxes rose 13.8 percent. Collections of individual nonwitholding taxes rose 43.2 percent. Collections of sales and use taxes, reflecting September sales, rose 1.1 percent in October. Due in part to late corporate September payments, collections of corporate income taxes rose 143.0 percent.
On a year-to-date basis, total revenue collections rose 4.8 percent through October, ahead of the annual forecast of 2.9 percent growth. Adjusting for the accelerated sales tax program, total revenues grew 4.0 percent through October, ahead of the adjusted forecast of 2.7 percent growth.
"October's increase in revenue after a 0.7 percent decrease in September is a reminder of the continued volatility in the Commonwealth's financial outlook. While any increase in revenues is certainly positive, the continuing uncertainty surrounding our federal government's financial outlook, and the looming fiscal cliff, mean Virginia must look beyond these short-term increases and prudently prepare for how to weather any potential financial challenges in the coming months. To not do so would be irresponsible.
"That is why earlier this week, as I have done every year of this administration, I asked all state agencies to submit plans outlining how they would best reduce spending in their departments, in this case by 4 percent, should such reductions become necessary. No final decisions have been made. Our future budgetary actions will be determined by this nation's economic recovery, and how leaders in Washington D.C. address the looming fiscal cliff. A failure to find a resolution prior to this fast approaching deadline would have negative economic consequences on all the states, Virginia included. At this time we are simply preparing for this possible, but still avoidable, outcome. I continue to urge leaders in both parties to work together to find a solution to this pressing issue.
As we continue to prepare Virginia's budget and ready for any changes that may occur at the federal level, and the impact on Virginia's finances from them, we are aware that more than 250,000 Virginians are still out of work—an unacceptable statistic that hits home throughout the state. We continue to contend with federal policies that are detrimental to private-sector job creation and are making any recovery more difficult. Our focus will continue to be on taking every step necessary to help the private sector create good paying jobs for our citizens. That includes making state government more efficient and effective, and ensuring that we spend taxpayer dollars wisely and responsibly."