WASHINGTON, March 13 |
WASHINGTON, March 13 (Reuters) – Virginia broke a four-month streak of revenue gains in February and posted a 2 percent decline compared with the same month in 2012, the largest drop since December 2011, Virginia’s governor said on Wednesday.
“While overall economic indicators continue a trend of progress and recovery, this month’s decline in revenue reminds us that our future economic growth is still insecure and uncertain,” said Governor Bob McDonnell in a statement. “Virginia continues to fare better than neighboring states.”
For more than a year and a half, Virginia has mostly posted monthly gains in revenues. Revenues have dropped only three other times since July 2011. In December 2011, it posted a decline of 4.7 percent. There were also drops of 0.7 percent in September and 0.4 percent in June.
Those declines compare to the 19.5 percent spike in January, which followed a 4.9 percent rise in December.
Virginia is especially vulnerable to the federal spending cuts known as sequestration because of the military presence in the state as well as heavy federal spending on procurement and salaries. Its proximity to the U.S. capital, though, also helped the state emerge from the 2007-09 recession faster than others.
Secretary of Finance Ric Brown in a letter to the governor warned that “February is not generally a significant month for revenue collections.” Also, last February occurred in a leap year, and the extra day helped boost revenue growth 17.2 percent, he said.
The decrease in February 2013 from the year before was driven by a 5.7 percent drop in collections of payroll tax withholding, which would have been affected by the loss of a day for making deposits, according to Brown. Withholding taxes provide 63 percent of the state’s general fund revenues.
Sales taxes, which support 20 percent of the general fund, were up 10.3 percent.
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Virginia breaks streak with largest revenue drop since Dec. 2011
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