By Dick Hall-Sizemore

The state’s May revenue report has been released today.   As one would have expected, the May 2020 general fund (GF) revenues were down significantly from May 2019 and the year-to-date GF revenues are running behind the annual forecast.

However, on the somewhat bright side, the administration is now saying that it expects the decline in GF revenue for the fiscal year to be less than previously predicted.  In last month’s report, Secretary of Finance Aubrey Layne predicted that the shortfall in FY 2020 GF revenue would be $1 billion.  Now, he anticipates that “fiscal year 2020 revenue collections will be less than $ 1 billion below the official forecast.”   Layne told the Richmond Times-Dispatch that total GF revenues for the year were down about $800 million and he expected that the state would make some of that up in June.  He summarized by saying, “We’re going to end the fiscal year in a better position than being $1 billion down. I don’t know how much it’s going to be, but the good news is what we have projected and told people — we’re going to be well within that.”

Looking at the details, the GF revenues for May 2020 were about 21 percent lower than May 2019.  As for the year-to-date GF revenue, the state has taken in 1.2 percent less than in the comparable period last fiscal year.  (An increase of 3.1 percent would be needed to meet the forecast.)

The effect of the pandemic, with stay-at-home orders and closure of businesses, was evident in the 13 percent decline in revenue from the withholding of individual income taxes and a 12.5 percent decline in sales tax revenue, both compared to May 2019.  A 34.6 percent decline in the revenue from nonwithholding taxes and estimated payments was partially due to the movement of the payment date from May 15 to June 1.  Those are the sources from which Layne expects to make up some of the loss in June.

Transportation revenue continued to take a hit.  The total transportation revenue declined by 22.6 percent for the month, compared to the prior year.  With revenue from the  motor vehicle sales and use tax revenue down by a third and revenue from motor fuel taxes off by a quarter, it was saved from a larger overall decrease by “only” a 11.6 percent  decrease in the state sales and use tax revenue, the largest component of the transportation revenue.  For the year-to-date, transportation revenue is about $65 million ahead of this time last fiscal year, but is about $88 million short of what had been projected.

In summary, state GF revenues in the current fiscal year will be significantly less than originally projected.  However, the shortfall will not be as large as once feared and, due to actions taken in anticipation, the state is in a good position to deal with it.  Furthermore, it will probably also be in a better position going into the next fiscal year than had been anticipated.

(Here is the address of the website on which the transmittal letter and detailed tables could normally be found.  I say “normally” because the website has been acting erratically, with the May reports being available only sporadically.)