This year marks the first year that Virginia’s revenue collections have dropped outside of a national downturn as the state brought in $439 million less than expected, reports The Washington Post.
Although Virginia seemed to navigate the Great Recession without much damage due to the heavy defense sector, Governor Terry McAuliffe announced a 1.6 percent drop in revenue for the fiscal year, which ended June 30. This contradicts the commonwealth’s projection of a 1 percent growth.
The increase in capital gains tax collections is believed to be why the growth was predicted; however, it appears that this increase is not going to become a long-term trend, as budget forecasters once believed. Officials have been predicting the revenue shortfall since May, but they only thought it would fall short by $300 million.
The past fiscal year’s budget included measures that prevented them from going into the red despite the unexpected drop in income. However, this affects the new two-year budget that went into effect on July 1, as those funds would have been able to roll over.
Current officials are saying the loss of roll over money, in combination with adjusted capital gains tax revenue expectations over the next two years, will result in a $1.5 billion loss for the current budget.