April Revenues Were Down, but Forecasts Should Not (necessarily) Be
The April revenue report is out, and General Fund receipts declined 12.1% versus 2008.
It was easy to see coming. As we wrote on March 10:
In 2008, March through June were quite volatile year-on-year, with a 5% decrease in March, a 36% increase in April followed by a 21% decrease in May.... It is unlikely we'll know where we'll end up until we are there.
Last year, Budget Director Mary Lassiter noted the spike in April was unusual and likely to result in a drop in May 2008 (which it did):
State Budget Director Mary Lassiter explained the growth seen in April is an anomaly, and will largely be given back in May.
"A year ago, receipts fell dramatically in April and then rebounded in May," she said.
"This year, the Department of Revenue got the money in the bank quicker. The evidence that this is timing-related is reflected by General Fund receipts in the first nine days of May this year, which are below receipts in the same nine-day period in the previous year by about $188 million."
If 2008 was an anomaly, then perhaps it is worth noting the April 2009 receipts are up 19% versus April 2007, back when the economy was in reasonable shape as compared to today's "challenging revenues." This overall increase includes a 22% increase in sales and use taxes, a 47% increase in individual income taxes and an 11% increase in total income taxes.
Or perhaps it is not a useful comparison. Regardless, given the recent volatility of April and May receipts, it is difficult to draw conclusions from them.
Remember this as your legislators and Governor try to tell you that the latest budget numbers "are no surprise, but they are further proof that the next fiscal year is going to be the toughest one we've faced in decades."
