Virginia Revenues Outpace Forecasts by 42%

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BRADENTON, Fla. — Virginia Gov. Terry McAuliffe told a legislative panel that a "reversal in fortune" positioned state revenues to outpace forecasts by substantial sums.

While a shortfall of $2.4 billion had been anticipated through fiscal 2016 for various reasons, including federal government cutbacks, the state ended 2015 with a surplus of $549.6 million.

"This represents the largest revenue surplus in the Commonwealth's history, exceeding the $544.6 million revenue surplus in fiscal year 2005," McAuliffe told an appropriation committee Aug. 26. "What a difference a year makes."

Total revenue collections rose by 8.1% in fiscal 2015, while state forecasters expected 4.7% growth, he said, adding that the surplus was largely due to strong individual non-withholding and payroll withholding.

After growth rates of 2.1% in fiscal 2013 and 2.3% in fiscal 2014, withholding collections more than doubled to 5.3% last year.

"In its simplest form withholding growth is the product of wage and job increases," McAuliffe said. "Clearly, last year's revenue performance in this source is an indicator that Virginia's overall economy is growing stronger and healthier with each and every day."

While the year ended with a surplus, he reminded the committee that the state dipped into the rainy day fund for $470 million. However, the state is on track to deposit $605 million in fiscal 2017, bringing the reserve fund to about $845 million.

McAuliffe said every penny of the surplus is already obligated to priorities such as the rainy day and water quality improvement funds.

"So we start off this year with a clean slate," he said. "We have also maintained our triple-A bond rating throughout a period of historic revenue fluctuations and economic challenges."

McAuliffe said he would file his biennial budget in December and that it would include increased spending for education. He also asked lawmakers to work on measures to reduce health care costs.

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