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Politics Virginia reports $730 million budget windfall as economy weathers the pandemic better than expected

01:25  16 february  2021
01:25  16 february  2021 Source:   washingtonpost.com

On The Money: Biden signals he'll move forward on COVID-19 relief without GOP | Economy adds 49K jobs in January, unemployment falls to 6.3 percent | Minimum wage push sparks Democratic divisions

  On The Money: Biden signals he'll move forward on COVID-19 relief without GOP | Economy adds 49K jobs in January, unemployment falls to 6.3 percent | Minimum wage push sparks Democratic divisions Happy Friday and welcome back to On The Money, where we're wishing a Happy Super Bowl Weekend to all who celebrate. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.Write us with tips, suggestions and news: slane@ thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

RICHMOND —Virginia Gov. Ralph Northam (D) said Monday that his administration has identified a windfall of $730 million in unexpected tax revenue as the General Assembly works on the state's two-year spending plan.

The late Valentine’s Day gift for lawmakers who are hammering out the budget is the latest sign that Virginia’s economy was not hit as hard by the coronavirus pandemic as had been feared.

[Virginia’s House and Senate pass competing state spending plans]

“These revised budget numbers tell us that Virginia’s economy continues to thrive, in spite of the pandemic,” Northam said in a news release.

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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.

Illinois cuts 2022 fiscal gap by $2.5B after 'economy performed more strongly than expected'

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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.


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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 unveils Virginia budget plan with big spending on coronavirus as economy improves]

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.

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  'Trump in heels' emerges as problem for GOP in Virginia A Virginia state senator and gubernatorial candidate who has described herself as "Trump in heels" is emerging as a problem for the state's Republican party as they seek to take the governor's mansion.Amanda Chase boasts enthusiastic grassroots support in pockets of the state. But she has also drawn bipartisan rebuke for incendiary statements calling for martial law to overturn the 2020 presidential election and seemingly expressing support for the mob that stormed the U.S. Capitol. That's left Democrats eager to paint her as the face of the state's Republican Party.

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.

Read more: Ralph Northam wearing a suit and tie: Virginia Gov. Ralph Northam (D), shown at a news conference in November, on Monday reported to the General Assembly that state budget revenue is running $730 million higher than expected. © Steve Helber/AP Virginia Gov. Ralph Northam (D), shown at a news conference in November, on Monday reported to the General Assembly that state budget revenue is running $730 million higher than expected.

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usr: 1
This is interesting!