The Timing of Individual Income Tax Refunds Accounted for the Surge RICHMOND - Governor McAuliffe announced today that revenue increased 21.7 percent in the month of February. On a fiscal year-to-date basis, total revenue collections rose 6.6 percent, well ahead of the revised annual forecast of 4.7 percent growth contained in the enrolled budget bill as passed by the 2015 Session of the General Assembly.
The timing of individual income tax refunds drove the significant increase in February, which is not typically a major month for revenue collections.
“February’s revenue report is clearly good news about our state’s revenue picture and our economy,” said Governor McAuliffe. “However, as enormous sequestration cuts loom and congressional dysfunction continues to create uncertainty for our Commonwealth, we must continue to work together to grow, diversify and reduce our economic reliance on Washington. I am proud of the progress we are making, and look forward continuing our efforts to build a new Virginia economy.”
Collections of payroll withholding taxes rose 3.5 percent in February. Collections of sales and use taxes reflecting January sales rose 4.2 percent in February. February receipts include January post-holiday sales and gift card purchases, completing the holiday shopping season.
The Department of Taxation issued $374.0 million in refunds in February compared with $460.8 million last year, an 18.8 percent decline. The filing season opened earlier this year than last year so a significant amount of the refund activity that occurred in February 2014 occurred in January this year. For the January-February period, the Department of Taxation issued about 1 million refunds, the same amount as last January-February. In addition, February revenue collections were positively affected because refunds to insurance companies with respect to the insurance premium income tax were processed in January this year as opposed to last year when the refunds were processed in February.
On a year-to-date basis, collections of payroll withholding taxes – 63 percent of General Fund revenues -- increased 4.2 percent, ahead of the revised annual forecast of 4.0 percent growth. Sales tax collections - 19 percent of General Fund revenues – increased 4.4 percent through February, behind the annual forecast calling for a 4.9 percent increase. Adjusting for the accelerated sales tax program and the 0.1 percent sales tax transfer to transportation required by the provisions of HB 2313, total revenues rose 6.5 percent through February, ahead of the adjusted forecast of 4.5 percent growth.
To view the full revenue report click here.