Finance Secretary Sees Signs of Economic Hope
Virginia’s economy may be close to turning a corner after two months of job losses and business closures, Gov. Ralph Northam’s top finance official told lawmakers on Monday.
The commonwealth’s staggering unemployment numbers -- around 670,000 unemployment claims since mid-March -- have pushed unemployment to an estimated 10%, Secretary of Finance Aubrey Layne told the House Appropriations Committee.
That’s still several points lower than the roughly 15% national unemployment level. Layne said the state’s large workforces in the federal government, tech, and shipbuilding have helped avoid deeper losses as those workers have largely continued to work.
“Hopefully that will be a good base for us to build on as we help some of these other industries open over the next few months,” Layne said.
Virginians are also still spending, with state sales tax collections dropping just 0.5% in April compared to the year before (though Layne said the number is more reflective of March sales).
“I think we're getting closer to a bottom,” Layne said. “We may not be at a bottom, but we’re much closer to it than we were when this thing started 45 or 50 days ago.”
The state’s economy has been helped by federal spending. Virginia businesses and non-profits have received $14 billion from the federal Paycheck Protection Program, which incentives employers to continue to pay workers.
And Congress’ extension of unemployment benefits means many workers are still getting paychecks.
Layne said they’ve been continuing to shop for food, alcohol, and online, while retail stores have likely taken a deeper hit.
The Northam administration is still expecting a budget loss of around $1 billion by the end of the fiscal year in June, Layne said, though the actual number may end up being lower. He said he expects lawmakers to return this summer to consider what is likely to be cuts to the new, two-year budget they sent Northam in March.
The state has so far received over $6 billion in aid from the federal government, with most of the funding tied to coronavirus relief rather than expected budget gaps caused by drops in tax collections.
Hard-hit local governments will get a slice of the money based on their population sizes, including $20 million for the City of Richmond, $30.7 million for Chesterfield County, $9.4 million Hanover County and $28.8 million for Henrico County.
That money can also only be used for purposes related to the pandemic, a stipulation local governments have pushed Congress to change.