(Reuters) - The revenues of U.S. state Virginia continue to surpass expectations, with sales and corporate income taxes providing a significant boost in March, the state treasurer said on Monday.
Total revenue collections rose 7.6 percent last month from March 2011, and are up 5.3 percent for the fiscal year-to-date, said Treasurer Richard Brown in a letter. The commonwealth forecast collections to grow 4.6 percent this fiscal year, which ends June 30, from last year.
“Lower payments of individual refunds and strong sales and corporate income taxes drove the growth. Recordation tax receipts also contributed to the increase,” he wrote.
Investors in the $3.7 trillion municipal bond market are eager for indicators that issuers are regaining their fiscal strength.
If Virginia’s revenues continue to beat forecasts, it will have breathing room in its spending during the fiscal year that starts July 1.
Individual income taxes have grown 6 percent this year, but payroll withholding taxes fell 5 percent in March. Brown attributed the decline to calendar issues - this March had one fewer Wednesday, a prime withholding day, than last year.
Meanwhile, sales taxes rose 11.1 percent, partly due to changes in the state’s accelerated sales tax program.
Brown added that March is usually a quiet month for tax collections, while “the last three months of the fiscal year, particularly April and May, are significant collections months.” In order to meet budget forecasts, Virginia must bring in $5 billion that quarter, he said.
Virginia neighbors the nation’s capital and is home to many military installations, which has helped it pull out of the recession faster than many states. While its collections fell in December, they grew in every other month over the past year. Its unemployment rate is 5.7 percent, compared to nearby Maryland, where it is 6.5 percent.
In a statement, Virginia Governor Bob McDonnell said “it is evident that our economy is beginning to turn around” and called on the legislature to quickly pass a budget. A standoff over the state budget pushed the legislature into an extra session this month.
Reporting By Lisa Lambert; Editing by Andrew Hay