Va. revenues show whopping January uptick

RICHMOND, Va. (AP) -- As legislative budget writers prepare for final negotiations, Virginia's tax collections for January show the largest jump in 2½ years last month because of robust income tax collections, a quirk of the calendar and a delay in refunds.

January's $1.8 billion in general fund receipts is 19.5 percent greater than the $1.5 billion gleaned in January 2012, according to Finance Secretary Richard D. Brown's monthly report Monday to Gov. Bob McDonnell.

That's the biggest monthly increase since an aberrant 21.8 percent spike in June 2010 inflated partly by the start of the accelerated sales tax, a budget-balancing gimmick the General Assembly enacted then to cope with the deepest economic downturn since the Great Depression.

Brown said last month's windfall was partly attributable to one more deposit day than the state had last January.

Also distorting the picture, Brown wrote, was a delay in a federal electronic income tax filing program. Refunds that totaled $97.1 million in January 2012 fell to about $30 million last month.

But the state's two largest sources of general revenue were strong by any reckoning. General taxes support such core state services as public education, health care and public safety.

Taxes withheld from paychecks, which account for nearly two-thirds of general tax collections, increased by 17.5 percent for the month — from $875 million last January to slightly more than $1 billion last month.

Estimated income taxes paid quarterly by the self-employed and investors jumped nearly 43 percent. Brown said the state received more "nonwithholding" checks last month than the same month a year earlier, and that the average check was 25 percent greater. Nonwithholding income taxes account for about 15 percent of general tax collections.

For the fiscal year that began July 1, January's haul boosts overall general fund revenues to $9.4 billion, which is 6.2 percent higher than the $8.8 billion collected over seven months into the last fiscal year. That's well ahead of the overall forecast for 3.6 percent growth on which budgeted spending is based.

December and January sales taxes for the holiday season increased only 1.4 percent, less than half the budgeted forecast of 3 percent. Sales taxes account for one-fifth of general revenues.

The report emerges at the start of two weeks of legislative maneuvering and high-level, closed-door negotiations to put the state's budget into its final form before the General Assembly's scheduled Feb. 23 adjournment.

McDonnell hailed the rosy numbers but asked legislative budget negotiators to be mindful of profound economic consequences to Virginia if deep, indiscriminate federal budget cuts known as "sequestration" aren't averted.

"Sequestration is a direct threat to our economic recovery, and to the jobs of thousands of Virginians. The President and Congress must come together to ensure that sequestration does not take effect," McDonnell said.

Virginia, home to the Pentagon and the world's largest U.S. Navy base in Norfolk, has large numbers of active and retired military. It also has large populations of federal employees and corporate contractors in northern Virginia and Hampton Roads. Because of that, Virginia stands to bear the heaviest economic burden proportionately of any state from sequestration.