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Virginia finance secretary reports $395 million midyear general-fund surplus amid cooling job growth
Summary
The secretary of finance told the House Finance Committee that Virginia's fiscal-year-to-date general fund receipts exceed forecast by about $395 million (2.6%), driven by strong non-withholding receipts and fewer refunds; he also described a cooling labor market and the outsized effect of federal employment changes on state numbers.
The secretary of finance briefed the House Finance Committee on midyear revenue performance and economic conditions, reporting that fiscal-year-to-date general fund collections exceed forecast by approximately $395,000,000, or about 2.6%.
The secretary said December was an unusually strong month for collections and identified two principal drivers of the variance from forecast: stronger-than-expected non-withholding receipts and fewer refunds. "At midyear, we have $395,000,000 more than we thought we'd have," the secretary said, noting that non-withholding receipts are volatile and that lower-than-expected refunds contributed materially to the surplus.
On labor-market trends, the secretary said the national labor market is cooling (50,000 jobs added in December, about 0.4% year-over-year) and that Virginia's recent gains have slowed (8,600 jobs added in November, putting year-over-year growth at roughly 0.2%). He attributed a large job loss in October primarily to decisions by federal employees tied to a federal deferred-resignation program, saying those residency/place-of-work measurement issues have amplified volatility in Virginia's employment statistics.
The secretary reviewed sectoral employment and wages, saying total nonfarm employment in Virginia is roughly 4.2 million and highlighting professional and business services (about 800,000 jobs) and trade/transportation/utilities (about 683,000 jobs) as large sectors. He noted that federal-government employment counted by place of work is about 173,000 and that residency-based measures suggest a larger federal-worker footprint on Virginia's economy.
The secretary also outlined forecast sensitivity: because of midyear strength, revenues could decline by a substantial amount and still meet the annual forecast (he cited a decline threshold used in internal modeling). He closed by offering to follow up on specific questions and asked staff to provide additional data on federal-employee compensation differences when reemployed; Delegate McQueen requested that follow-up and the secretary agreed to look up comparative compensation figures.
No formal fiscal actions or committee-level changes to the budget were proposed during the briefing.
