Virginia revenue outlook: $708.5 million ahead but officials warn gains are volatile

Secretary of Finance (Secretary Sickles) told the Senate committee that Virginia's fiscal 2026 general fund receipts are $708.5 million ahead of the adopted forecast but cautioned the surplus is concentrated in volatile sources.

"These sources in particular are not guaranteed at all to perform next year," Sickles said, explaining that most of the upside is tied to non-withholding (capital gains and other investment-related receipts) and to refunds that have yet to be paid. The chair of the committee, opening the meeting, also noted that the Senate budget responds by providing a $100 refund per taxpayer, raising the standard deduction and sunsetting a $1.9 billion annual tax subsidy to data centers.

Why it matters: While the Commonwealth is ahead this year, officials said the underlying economic indicators show risk. Sickles reviewed national indicators (the U.S. added 178,000 jobs in March but year-over-year growth is only 0.2%), and noted higher oil prices are feeding inflation: a sustained $40 per-barrel rise in oil, he said, could cost households roughly $1,000 a year and raise inflation by roughly 60 basis points.

Key details - Fiscal performance: General fund receipts are $708.5 million ahead for FY2026, with material contributions from non-withholding and lower-than-expected refunds. Withholding receipts and sales tax are broadly in line with forecasts; corporate tax collections remain below expectation. - Jobs and sectors: Virginia is down about 31,600 jobs since the start of the fiscal year, with federal employment and professional/business services accounting for most of the decline. Sickles cited the data center industry as a large GDP contributor and noted policy changes to its tax treatment are consequential for economic development plans. - Volatility warning: Sickles and committee members emphasized that non-withholding and refund timing are "backward-looking" metrics tied to past asset-price gains and are therefore unstable for budgeting recurring expenditures.

What officials proposed: The committee chair and Sickles urged fiscal restraint and preserving reserves to protect the Commonwealth's triple-A bond rating. The Senate budget approach noted in the hearing packages one-time relief to taxpayers and targeted investments rather than expanding ongoing commitments funded by volatile revenue.

Next steps: Senators asked about conferees and possible new revenue sources (fee changes, removing exemptions, or broader tax reform). Sickles said the administration has "no public plan" for new taxes now but is open to options and urged that conferees meet to reconcile House and Senate six-year outlooks.