RICHMOND | State tax receipts fell nearly 14 percent last month, reflecting a strained economy and uncertainty over whether Virginia will finish ahead of its budgeted expenses in the fiscal year’s final weeks, according to a state report released late Friday.
Declines in income tax receipts and the transfer tax - the levy paid to record real estate transactions - contributed most to the shortfall.
The “nonwithholding” income tax paid chiefly by investors and the self-employed dropped nearly one-fourth, from last May’s collections of $687 million to $516 million last month.
In her monthly memo to Democratic Gov. Tim Kaine, Finance Secretary Jody M. Wagner described it as “a significant retreat in nonwithholding payments” that drove a 13.8 percent decrease in general fund revenues.
The withholding tax paid by most wage earners dropped nearly 7 percent, or about $52 million, from May last year. Revenue from the tax constitutes nearly 60 percent of total general fund collections.
The transfer tax, paid to record deeds as well as wills, contracts and lawsuits, fell 27 percent from the same month last year - from $49.2 million to $35.7 million last month. It was also the sixth consecutive month of “recordation” tax declines of 20 percent or more, evidence of a state housing market still struggling to rebound from the mortgage crisis.
The poor monthly showing leaves the state with year-to-date revenue growth of 1.8 percent entering the final month of its fiscal year. That’s slightly ahead of the revised state forecast for 1.2 percent revenue growth on which the current state budget is based.
The report came after better-than-expected April collections. Because both are significant months for revenues, Mrs. Wagner said, April’s and last month’s reports should be considered together to accurately assess growth.
That makes this month critical in determining whether the state finishes with more money than spending commitments in the state budget that expires June 30.
This is also a significant month for tax collections, Mrs. Wagner wrote, and collections for the month “must total about $1.62 billion to meet the forecast for the fiscal year.”
The state collected $1.68 billion last June.
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