Virginia revenues rose 2.6 percent in September from year ago

Reuters News
Posted: Oct 11, 2013 5:52 PM

WASHINGTON (Reuters) - Virginia's revenues rose 2.6 percent in September from the same month in 2012 as a result of a strong inflow of corporate and individual income taxes, Governor Bob McDonnell said on Friday.

Corporate income taxes were up 16.7 percent from September 2012, individual withholding rose 2.9 percent, and the individual tax payments that are not withheld from paychecks grew 2.1 percent. Conversely, sales taxes fell 2.7 percent.

Individuals and corporations make their first estimated tax payments of the fiscal year in September.

For the fiscal year that started in July, revenues are up 2.8 percent, ahead of the annual forecast of 1.5 percent growth.

Still, McDonnell sees storm clouds ahead. The state is home to many federal workers who have been furloughed without pay as Congress fights over a spending resolution. They may receive back pay after the shutdown ends.

"The ongoing federal government shutdown will have a direct negative impact on state revenues in the months ahead, just as it is already having a direct, negative impact on Virginians in their daily lives," said McDonnell in a statement. "The success of our Commonwealth is being threatened by the ineptness of Washington."

At the same time, the state is considered especially vulnerable to the federal spending cuts known as sequestration because of the military presence there as well as heavy federal spending on contracts and salaries.

(Reporting By Lisa Lambert)