(The Center Square) – Virginia closed fiscal 2026 nearly $939 million above its general fund revenue forecast, even as employment fell and Gov. Abigail Spanberger cautioned lawmakers against assuming the gains will continue.
State finance officials presented the year-end numbers Wednesday to the General Assembly’s Joint Money Committees.
Virginia ended the fiscal year with 43,600 fewer jobs. Federal government employment and professional and business services each lost about 20,000 jobs, according to the presentation.
Despite the job losses, average wages grew about 3.3% during the fiscal year, helping support income tax withholding.
Nonwithholding income tax collections provided another boost, growing by more than $500 million and coming in $347 million above forecast. Sales tax collections grew 6.5% during fiscal 2026.
Spanberger told lawmakers the stronger revenue numbers should not be treated as a guarantee of what comes next.
“But a good year isn’t necessarily a guarantee of the next one,” Spanberger said in prepared remarks.
She tied that caution in part to expected federal changes affecting Medicaid and SNAP, saying they could shift additional costs to Virginia’s budget in coming years. Spanberger said more than 300,000 Virginians on Medicaid risk losing coverage as provisions of the federal law take effect.
The final revenue figure also came in above what state officials expected earlier this summer. A June revenue reforecast projected Virginia would finish fiscal 2026 about $585.5 million above the official forecast.
The administration said in July that higher nonwithholding income tax payments and fewer individual income tax refund liabilities accounted for about two-thirds of the preliminary year-end surplus, two sources officials described as highly volatile.
The economic outlook presented Wednesday showed slower growth ahead. U.S. real gross domestic product is projected to grow 2% in fiscal 2027 and 1.9% in fiscal 2028.
Virginia’s current budget assumes general fund revenue growth of 4.1% in fiscal 2027. That includes $600 million from the state’s data center consumption tax. Without that revenue, other general fund sources would need to grow about 2.3%, according to the presentation.
The new fiscal year has started ahead of forecast. July general fund revenues were $78.2 million, or 3.3%, above projections.
The preliminary year-end balance sheet includes $585.5 million for fiscal 2027 beginning balances as lawmakers continue to monitor revenues and the economic outlook.
This post was originally published on The Center Square.
