- Associated Press - Wednesday, July 14, 2010

RICHMOND, Va. (AP) — Virginia’s battered state budget ended a turbulent 2010 fiscal year on June 30 with a surprise surplus of about $220 million, government figures show.

That exceeds forecasts of a month ago anticipating a $140 million unspent balance and guarantees a December bonus for state employees, the first pay boost in years for most.

Gov. Bob McDonnell’s administration was to formally announce the figures Wednesday in a late morning news conference.

The surplus ended a dire budget year in which official revenue forecasts were lowered three times and raised once as policymakers struggled to reconcile a nearly $2 billion shortfall.

Preliminary June revenue figures show that the larger-than-expected year-end balance resulted mostly from strong collections of individual and corporate income taxes, Finance Secretary Richard D. Brown said.

Taxes withheld from individual wages barely topped $820 million last month, up 2.5 percent from June 2009. That brought final annual collections of the tax that accounts for two-thirds of the state’s general operating budget to nearly $9.2 billion by the time the fiscal year ended on June 30.

It was an increase of just 0.4 percent over total withholding income tax collections for the previous fiscal year, but it beat the official forecast which was for an increase of only 0.2 percent, and that made the difference, Mr. Brown said.

Corporate income tax receipts of $157 million for June increased by 14.2 percent over the same month the year before, and collections of about $806 million for the full year were nearly one-fourth greater than the previous fiscal year.

Sales tax collections for the most recent month doubled what they had been in June 2009. In a bid to generate a cash boost, the state accelerated the schedule for retailers to turn in taxes collected on sales. But Mr. Brown said the accelerated sales tax generated less than expected and did not boost the final surplus figure.


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