Virginia revenues beat May forecasts; secretary warns of federal job risks

Secretary of Finance Steve Cummings told the Senate Finance Committee on June 4 that May revenue collections came in “strong, well above expectations,” leaving Virginia on track to exceed the 2025 forecast as enacted in Chapter 7 (2025).

Cummings said year-to-date revenues were up about $1.6 billion (5.9%) over last year and roughly $488 million (about 1.8%) ahead of the enacted forecast. For May specifically, collections exceeded last May by $86 million (3%) and beat the month’s forecast by $277 million (10.3%). “Payroll withholding, our largest source of revenues, is up 5.3% year to date,” he said, and overall the Commonwealth is “in a very solid position.”

The nut of the report is that even with a conservative scenario — Cummings said June receipts would have to fall 12% year-over-year to miss the forecast — the current trajectory supports the enacted budget. He noted nonwithholding (largely capital gains and similar sources) is up meaningfully, while refunds have been running higher than anticipated but softened in May.

Committee members pressed Cummings on downside risks tied to federal actions and local economic conditions. Senators raised anecdotal reports of federal contractors and high‑wage federal employees leaving the state; Cummings said data lags but that Virginia accounts for “10 plus percent of federal employment,” and a national reduction of 75,000 federal positions could translate to an exposure of roughly 7,500 Virginia workers if fully realized. He also warned that federal contractor layoffs tend to show up faster in claims and withholding than federal employee separations.

Members asked about other risks to the revenue outlook. Cummings and senators discussed: cooling national job growth, modest increases in Virginia unemployment (about 3.3% in April), elevated consumer debt, shifting retail‑sales revisions, and regional housing market pressures; Cummings said these are on the administration’s watch list and are among the reasons the enacted budget set aside roughly $900 million in unappropriated balances.

Cummings closed by saying the administration will present a full-year review at the joint money committee in August and that the state’s economics team will continue monitoring indicators as the fall budget process begins.

Looking ahead, senators requested further analysis on whether state employee vacancy rates materially contribute to year‑end balances and asked for quicker signals tying federal job announcements to withholding and migration data.