Va. tax revenues dip 2 percent in February

RICHMOND, Va. (AP) -- Virginia general revenues declined by 2 percent last month compared to February 2012 because of downturns in income tax collections that the state's top finance official warned may signal economic uncertainties ahead.

It's the fifth month in the past year that revenues have dipped below their marks from the previous year and the second time since November's 3.3 percent decline.

So far in the fiscal year that ends June 30, overall collections of revenues that fund such core services as education, health care and public safety were 5.5 percent over the same point a year earlier.

That's still comfortably above the projected 3.6 percent revenue growth that would yield $16.4 billion, upon which the state budget is based. But it's down from 6.2 percent year-to-date growth after January's 19.5 percent monthly revenue spike.

Finance Secretary Ric Brown wrote in his monthly report to Gov. Bob McDonnell that there had been a 5.7 percent drop in income taxes withheld from salaries and a 14.5 percent slide in estimated payments from investors and the self-employed.

It's only the eighth time during McDonnell's 37 months in office that withholding income tax collections have shown month-over-month declines and the 16th monthly dip in non-withholding collections during a period of slow recovery from the deep recession of 2008-09.

Income taxes represent about two-thirds of the state's general tax collections.

Brown says February's results are a reminder that future economic growth remains insecure and uncertain.

The bright spot was a 10.3 percent jump in sales tax collections, representing the last post-holiday sales, the fourth double-digit increase in sales tax revenues since the start of 2012 and the sixth of McDonnell's term. Sales taxes account for about one-fifth of the state's general revenues.

The tax paid to record deeds, wills, lawsuits and contracts that most closely tracks the housing market continued to reflect a continued solid rebound in Virginia's real estate industry. February "recordation tax" receipts were up 21 percent over the same month last year, the 26th monthly increase for that tax source since January 2010.

Recordation tax collections declined 44 times in the four years at the depth of the mortgage industry meltdown from 2006 through 2009 with an average monthly decrease of 16.9 percent.