Virginia Gov. Bob McDonnell said Virginia may collect as much as $152 million more than expected for the current two-year budget because of strong tax collections and lower-than-anticipated refunds to taxpayers.
Individual withholding collections through January were up 5.2 percent, ahead of the budget estimate of 3.4 percent, suggesting a rebound in small business hiring and wages, McDonnell wrote in a letter to the chairmen of the General Assembly’s budget committees.
McDonnell wants to use $50 million to shore up the state’s rainy day fund and about $38 million to eliminate a program that requires certain businesses to pay their taxes early. The program is scheduled to be phased out starting in fiscal 2013.
The governor also wants $37.5 million to start repaying money to the Virginia Retirement System. The state deferred more than $620 million in payments to the pension fund to help balance the current two-year budget.
The governor said the economy is starting to grow again, but remained cautious, noting that the increase in tax collections doesn’t signal a change in the underlying economic forecast.
“Any increases in state revenue must be budgeted conservatively,” he said. “This money should not be spent on recurring items, where any increase today would simply lead to pressures to continue that funding level in the years ahead.”
