by J.D. Davidson
Despite a double-digit percentage drop in payroll taxes in January and a dip in overall General Fund collections, Virginia Gov. Ralph Northam said the state’s revenue remains stable.
The state’s January 2021 revenue report showed payroll withholding taxes down 12.6% for the month compared with last January, but the state said the decrease was expected because of one less deposit day compared with a year ago. The report said collections of the sales and use taxes, showing December sales, rose 5.6% in January, and the combined December and January receipts rose 5.4% over the same time from a year ago.
“As we worked to put this pandemic behind us, we must stay focused on positioning our Commonwealth for broad-based and inclusive growth,” Northam said. “Our revenue picture remains stable, and I am confident that we can strengthen our cash reserves, provide Virginia families and businesses with the relief they need to get back on their feet, and meet our budget priorities, which includes giving our teachers a pay raise.”
Northam’s budget proposal includes a guaranteed 2% bonus for teachers, which could have been turned into a permanent 2% raise.
The House’s budget plan would provide a 5% salary increase to teachers beginning July 1, 2021, which would cost the state more than $231 million. The Senate’s version of the budget includes a more modest increase – a 3% raise beginning in August, which would cost the state more than $140 million.
On a fiscal year-to-date basis, total revenue collections rose 6% through January, much stronger than the predicted growth of only 1.2%.
“Collections have been strong for the first seven months of the fiscal year, especially in individual estimated payments, sales and use taxes, corporate income tax and recordation taxes,” Secretary of Finance Aubrey Layne said. “Besides the normal monthly payroll withholding and sales tax collections, estimated payments from individuals are due in January, making it a significant month for revenue collections.”
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J.D. Davidson is a regular contributor to The Center Square. An Ohio native, Davidson is a veteran journalist with more than 30 years of experience in newspapers in Ohio, Georgia, Alabama and Texas. He has served as a reporter, editor, managing editor and publisher.
Photo “Gov. Ralph Northam” by Gov. Ralph Northam.