State deficit stands at $236.5M, down from $1B spring forecast
Revenues increased by 2% over 2019, governor reports
The state’s fiscal year 2020 deficit, predicted at one point to reach as much as $1 billion, stands at $236.5 million, Gov. Ralph Northam announced Thursday. Also, the state’s revenues increased by 2% compared to fiscal year 2019.
The news comes as the General Assembly prepares to meet in August to make adjustments to the state budget due to the economic fallout from the COVID-19 pandemic. Northam said Thursday that although he is “pleased that our revenue shortfall is less than initially expected, we know this pandemic will continue to negatively affect our state’s finances as long as this virus is with us. We must all keep taking steps to protect public health so we can continue our economic recovery and ensure the commonwealth remains on strong financial footing.”
Before the pandemic reached Virginia, the state expected to see 3.1% growth in revenue over the last fiscal year, but 2% is a small victory in light of widespread unemployment and business closures since March. Secretary of Finance Aubrey Layne cautioned, though, that payroll withholding fell by 2% and retail sales went down 7% during the months of April, May and June, “contributing to a $496.5 million shortfall in the fourth quarter.”
Total revenues were at $3.1 billion in June, as the deadline for state income tax payments for individuals and businesses was extended to June 1 from May 1.
House of Delegates Appropriations Committee Chair Luke Torian, D-Prince William, issued a statement Thursday that he is “pleased to see these numbers, all things considered. This does not mean we’re looking ahead to the same comfortable biennium that we were last January. Better-than-expected, in this case, is still a long way from 2019 forecasts. Virginia households are still hurting.”
Northam’s announcement acknowledged that non-withholding income tax payments, mainly from 2019 tax returns, were on target, partly offsetting a $351.5 million shortfall in payroll withholding and sales taxes this spring.
The state comptroller plans to release its report on forecasts for fiscal years 2021 and 2022 on Aug. 18 at the Joint Money Committee meeting, information that will be used for the General Assembly’s adjustments to the biennial state budget.