State General Fund revenue collections higher than expected through October
One-third of the way through the fiscal year, revenue collections are 1.2%, or $103 million, over year-to-date revenue targets. That’s good news for keeping the state’s fiscal plan on track, but there is still a long road ahead.
The surplus would be even larger had $80 million in liquor store profits been transferred to the General Fund, as was expected in September. The profit transfer is still likely to happen, but it is not clear when it will occur.
October, typically, is an “average” month for revenue collections, consisting largely of income taxes on wages and sales tax collections. October 2014 revenues were a bit different, coming in 4.8% higher than the estimate for the month. Much of the surplus is due to an atypical month of inheritance tax collections, where actual collections exceeded the monthly estimate by 110.3%, or $90 million. Such a jump tends to be a one-time occurrence.
Tax collections through October are 52% higher, or $420 million more, than this time last fiscal year. Sales tax and personal income tax growth – and the October surge in inheritance tax revenue – account for much of the growth.
Corporate taxes through October are also higher than the previous year. But we are not expecting this trend to continue due to cuts in the capital stock and franchise tax rate that will reduce collections in the coming months.
Including non-tax revenues, which count transfers from other funds, General Fund collections are 8.1%, or $661 million, higher than this time last year. About one-third of the General Fund’s revenue growth is due to one-time transfers of cash from other state funds. These transfers were planned to help balance the 2014-15 budget. In the 2015-16 budget, these one-time revenues will have to be replaced, or there will be yet another year of cuts despite an expanding economy.
The next major measuring stick for General Fund revenues comes in December when quarterly corporate and income taxes are due.