Virginia’s budget surplus grows as revenues beat expectations due to Republican management

Virginia’s general fund revenues rose sharply in April, bucking signs of a national economic cooldown as the state continues to post steady long-time job growth and rake in more tax dollars than projected.

Gov. Glenn Youngkin announced Monday that general fund revenues are up 6.3% — nearly $1.5 billion — compared to the same 10-month period last fiscal year. April alone brought in $322.4 million more than the same month in 2024, marking an 8.8% jump. Overall, revenues are tracking 0.8% — or $211.1 million — ahead of the state’s official forecast, with two months left in the fiscal year.

“Virginia’s financials remain strong, reflecting strong job growth and business investment,” Youngkin said in a statement. “With over 265,000 more Virginians working today versus three years ago and over $100 billion in capital investment commitments from companies eager to grow in Virginia, the Commonwealth’s financial performance is tracking ahead of forecast.”

The upbeat state report comes even as the national economy posted a notable dip in growth. According to a memo from Secretary of Finance Stephen Cummings to the governor, real U.S. GDP growth fell sharply in the first quarter of 2025.

The decline was largely driven by a surge in imports, as consumers rushed to beat expected tariffs. Imports grew at a 9% annual rate, while the rest of the economy posted a more modest 2% pace.

Despite the GDP slide, hiring remained solid. The U.S. added 177,000 jobs in April, and Virginia tacked on 5,900 jobs in March — the most recent month with available data — led by construction, health care and transportation. The state’s unemployment rate nudged up slightly to 3.2% in March, up from 3.1 percent the previous month.

Still, federal employment is showing cracks. Virginia lost an estimated 4,100 federal jobs in March, while nationally the federal government shed 9,000 jobs in April — figures that state officials say bear watching.

“Strong revenue results for April, a significant collection month, indicate that the Virginia economy continues to exceed our prudent forecast,” Cummings said in a statement. “While we continue to have confidence in our FY2025 forecast and the long-term resiliency and strength of the Virginia economy, we are cognizant of potential short-term risks associated with federal job reductions and the resetting of trade relationships.”

Cummings added that the governor’s final budget decisions reflect a “prudent and responsible plan on behalf of our taxpayers to provide additional cushion for the commonwealth’s general fund resources.”

Meanwhile, inflation cooled slightly in April. Consumer prices rose 2.3% compared to last year, down from 2.4% in March and well below the 3.3% rate seen a year ago. Core inflation, which excludes food and energy, held steady at 2.8%. The Federal Reserve’s preferred inflation gauge also fell, with the core personal consumption expenditures index easing to 2.6% in March.

The Federal Reserve kept interest rates unchanged earlier this month and is expected to do so again at its June 18 meeting.