January revenues stay on track, barely
General Fund revenue collections exceeded revenue targets by $90 million in January, pushing the fiscal year-to-date revenue surplus to $360 million, or 2.3%. January marks the sixth straight month where tax collections exceeded the monthly targets.
Collections this fiscal year are $1.05 billion higher than at this point last year. Roughly one-third of this increase from last year is due to increased transfers from other funds and other non-tax collections in 2014-15. Tax collections are $707 million higher this year, or 4.9%, a general signal of an improving economy.
While this all sounds like good news, January’s results are more lackluster than they initially appear. Total revenues exceeded the January target due largely to $80 million in liquor store profits finally being transferred to the General Fund (the budget plan expected these profits back in September).
Of the major taxes, only sales and corporate net income taxes exceeded estimate in January. Many of the other major taxes – personal income, inheritance, realty transfer, and cigarette taxes fell short in January. So far, these shortfalls do not appear to be a pattern.
Corporate tax collections could be falling from last year’s levels in coming months – due to the capital stock and franchise tax rate cuts in 2012, 2013, 2014, and yet again in 2015. These repeated cuts contribute to the state’s funding gap for next fiscal year, which is $2 billion and rising.