Preliminary figures indicate that Virginia, once again, has completed the most recent fiscal year with a large revenue surplus. Governor Glenn Youngkin announced in July that preliminary estimates show that state revenues for the recently completed FY23 were nearly $1.5 million higher than forecasted last December (when an additional $3.6 billion also was projected to be available for appropriation by the end of June.) Key to the revenue increases were higher sales tax collection than expected (3.9% growth compared to a predicted 1.3% decline), payroll withholding growth of 4% and higher than expected corporate income taxes.
About $1 billion of the surplus is expected to be returned to taxpayers in the fall because of a new “pass-through entity tax,” under which many small business owners prepaid their taxes in the previous fiscal year. They will receive a state tax refund this fall, which means the state will be returning a portion of those additional revenues that were reported.
Governor Youngkin will brief legislative budget writers on the official end-of-fiscal-year budget picture at a joint meeting of the money committees on August 23rd.