State tax collection revenue fell 26.2% in April
Decline is mostly due to pandemic-related tax deadline extensions
State revenue from tax collections fell 26.2% in April, Gov. Ralph Northam announced Thursday. This is primarily due to tax deadline extensions for individual and corporate income taxes, which were extended until June 1 due to the COVID-19 pandemic.
“April tax receipts are consistent with our estimate of a $1 billion reduction in the fourth quarter of fiscal year 2020 related to the impacts of COVID-19,” Virginia Secretary of Finance Aubrey Layne said in a statement.
With April typically being a significant month, this has caused concerns for the state government’s financial planning.
“In normal times, we would assess the commonwealth’s finances during the April and May period,” Layne said in a statement. “However, with the delay in the payment date for individual and corporate taxes until June 1, April through June receipts must be considered together to properly assess collections.”
Although payroll withholding taxes increased 4.2% in April, the way in which the tax calendar is structured probably overstated the growth, according to the statement. Sales and use tax collections that reflected sales in March fell 0.4% in April.
On a fiscal year-to-date basis, total revenue collections increased 1.4% through April, but the original forecast was 3.1% growth.
“As anticipated, this is the first monthly revenue report to reflect the significant negative impacts of COVID-19 on the health of our commonwealth’s finances,” Northam said in a statement. “We are facing an unprecedented health and economic crisis, and we must combat this virus before we can begin to repair our economy.”