Revenue Numbers
The OSBD has put the November revenue numbers online.
If you recall, we explained back in October and again in November that General Fund receipts are up in Fiscal Year 2009, which began in July.
For the first three months of FY 2009 (July-September), General Fund receipts were up $17 million versus FY 2008, and were up another $17 million in October for a total increase of $34 million.
In November, they're up another $38.7 million. So far this fiscal year, receipts are up $72.7 million, or 2.2%.
The budget office explains that, of this $72.7 million, $48 million is accelerated collection of property taxes, in other words, taxes that would normally be collected later in the year.
Removing the $48 million accelerated collections, state revenues are growing at 0.75%.
How are state revenues continuing to grow if the economy is so bad?
We're going to generalize a little.
State tax revenues are about 90% dependent on sales taxes and income taxes, which generally split around 45-55 in the direction of income taxes.
So far this year, sales taxes have grown 0.8%.
Corporate income taxes, which in normal times might account for about 25% of the income tax total, are very negative. They are down over 50% versus last year, and in November "Corporation income tax receipts were negative for the month; Corporate tax refunds paid out exceeded cash payments into that account."
Individual income taxes, however, are up. In November we wrote:
Looking at the last CFG report and the revenue report for October, we find that income tax receipts were up 6.6% in the first quarter and 8% in October, this despite rising unemployment in the state. Yet the forecast for income taxes for the year says:
The interim forecast for the individual income tax calls for a decline of 4.7 percent for the remainder of FY09... The individual income tax grew by 6.6 percent in the first quarter of FY09, and is expected to decline by 4.7 percent during the remainder of the fiscal year. Further weakness in employment, wages and salaries, and weak aggregate demand all contribute to the lower forecasts. For the entire fiscal year, individual income tax revenues are projected to decline by 2.1 percent.
I can't dispute the expected "weakness in employment, wages and salaries," etc., but the fact remains that they are already weak and revenues are up anyway. I'd like the discrepancy of the first four months personal income tax receipts explained more thoroughly...
Here we are looking at November, and individual income tax receipts are way up:
Individual income tax collections rose by 13.7 percent. Receipts from withholding were up 7.9 percent and refunds were down from last year.
I mentioned I'd like an explanation for this counter-intuitive data:
Individual income tax collections were surprisingly higher and are contrary to the underlying economic data on employment and earnings.
Great. But this isn't an isolated surprise. Lexington experienced it as well:
In the payroll tax category, the city has collected $2.1 million more for the year, a 3.5 percent increase over this time last year.
So a small increase in sales taxes and significant increases in individual income taxes are keeping state revenues growing.
