Virginia revenue shows state economy may be recovering
Gov. Bob McDonnell's administration is predicting Virginia will conclude this fiscal year with a budget surplus, an encouraging sign that the state's economy may be turning around.
McDonnell announced Monday that state tax collections dipped just .2 percent in May compared to May 2009. The statistic was encouraging, because state budget-writers had predicted revenues would decline 2.3 percent in May. Still, revenues had been rising--showing .4 percent growth in April and 3 percent in March.
But according to McDonnell's office, the state remains on pace to end the year with a surplus, which wasn't the case last year. The state will need to take in $1.37 billion in June to ensure it ends the year with a surplus, a not unreasonable expectation given that Virginia collected $1.5 billion in June 2009, when the economy was softer.
This month's revenue report contains a few other bits of encouraging news. For instance, sales tax collections--a direct indicator of economic consumption--grew by 6.5 percent in May. That marked the second straight month of growth in sales tax collections, which grew by 7.3 percent in April. It's the first time sales tax receipts have grown for two months in a row since
November-December 2008 November-December 2007.
In a statement, McDonnell cautioned that more positive reports are needed before he can declare the state has turned a corner. However, he called the revenue indications "some welcome good news after years of the opposite."
"To beat revenue projections by two percentage points is a positive sign for the Commonwealth's economic recovery," he said. "I am particularly heartened by the back- to-back months of increases in collections of sales and use taxes. This is a small, yet very important, indicator that activity is returning to our economy, and Virginians are regaining some confidence in both the general fiscal outlook for our state and nation as well as the outlook for their own specific situations."
June 14, 2010; 1:59 PM ET
Categories: Robert F. McDonnell , Rosalind Helderman
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