September revenue collections in Virginia ticked up 3.9 percent from last year, but looming uncertainty on the federal front and overall economic uneasiness is still reason for caution, Gov. Bob McDonnell announced Wednesday.
The jump was driven by a 17.3 percent increase in individual non-withholding payments and a 5.8 percent increase in sales and use taxes. But with one less deposit day in September, receipts for individual income tax withholding — which make up 64 percent of general fund revenues — dropped by 3.7 percent. Year-to-date, withholding collections are up 4 percent compared to the same period last year, ahead of a projected growth rate of 3.4 percent.
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And year-to-date, revenue collections have increased 6.7 percent, ahead of the revised annual forecast of 3.7 percent.
But Mr. McDonnell, while not sounding an alarm, said the state needs to tread carefully.
“While Virginia’s economy continues its trend of growth this month, all indicators at the state and national level highlight the need for caution in forecasting and budgeting as our economy struggles to regain its footing,” Mr. McDonnell said. “Virginia’s economy continues to show modest growth and signs of improvement that surpass those of the nation’s economy as a whole, but the fragile national economy, persistent uncertainty regarding federal funding decisions, and our economy’s vulnerability to upheaval due to national and world events prompts economists and elected officials to take a cautious, conservative fiscal approach.”
The announcement comes as the governor participated remotely from Hampton Roads in a Wednesday meeting with the Joint Advisory Board of Economists (JABE) as he begins to prepare his one and only full biennial budget. Mr. Brown, staff members of the House Appropriations and Senate Finance Committees, and economists appointed by the governor make up the board.
