“These revised budget numbers tell us that Virginia’s economy continues to thrive, in spite of the pandemic,” Northam said in a news release.
The new revenue consists of $410 million in fiscal 2021 and $320 million in 2022, according to Northam’s office. It includes new figures for sales tax revenue from the holiday season, estimated tax payments from wealthy individuals, corporate income tax and the recordation tax on mortgages and deeds, Northam said.
The governor’s office regularly produces new revenue estimates that are used for preparing the state’s budget. A year ago, a similar revision produced a windfall of nearly $300 million.
At that time, though, lawmakers were assembling a spending plan that was already generous, based on a roaring economy. Once the pandemic hit and Northam began issuing executive orders that shut down businesses and restricted social movement, anticipated revenue plummeted.
In the summer, Virginia officials expected a shortfall of more than $1 billion. Northam froze all new spending and summoned the General Assembly for a special legislative session to reconfigure the state’s spending plan.
Revenue expectations began ticking back upward in the fall — driven largely by the fact that although individuals and small businesses have been decimated by the pandemic, large employers have continued to do relatively well.
Northam presented the new figures to leaders of House and Senate money committees on Monday morning. Each chamber finished work on competing budget proposals on Friday, and the differences are slated to be worked out over the next few weeks.
The new revenue could help smooth out areas where the two plans disagree. The Senate, for instance, backed a Northam proposal to spend more than $500 million to support school systems that have been harmed by pandemic-related shutdowns, while the House proposed a little more than $400 million.
The Senate proposed a 3 percent raise for teachers and the House 5 percent.
Lawmakers also could opt to use some of the new revenue to shore up the state’s reserve funds, which safeguard Virginia’s coveted AAA bond rating.