State revenue collections have dipped slightly below the projected growth rate for the fiscal year, raising the possibility that the State may have to close a budget gap by summer. February revenue collections fell 11.7 percent compared to the same month last year, coming in at about $1.6 billion, the state treasury reported earlier this week.
While the month of February typically contributes only a small portion of total revenues to the State, the overall revenue for the fiscal year to date is lower than projected, totaling about $16.7 billion. That’s an increase of 1.8 percent from the same period during the last fiscal year, but, the state projected a growth rate of 2.7 percent.
Revenue had been keeping pace with the growth rate for most of the fiscal year. Acting state treasurer Ford Scudder said last month when the governor unveiled his proposed budget that revenue collections were about where they needed to be. He didn’t raise any concerns about a budget gap.
Income tax collections — the state’s largest source of revenue — declined about 16 percent in February, but the treasury said that was “caused primarily by an increase in refund processing” and that “withholding and final tax payments remain strong.” The Division of Taxation processed 16 percent more income tax returns in February this year than it did last year, paying out $134 million more in refunds.
Corporate business tax revenues were off nearly 118 percent in February because refunds exceeded collections.
“February is typically a very small month for Corporation Business Tax collections, and this February the Division of Taxation distributed $39 million more in refunds than last year,” the treasury said. “Year-to-date, Corporation Business Tax refunds are running $115 million ahead of Fiscal Year 2015.”
CBT revenue is down 18 percent for the fiscal year, lower than the 12 percent drop-off projected in the state budget.
Sales tax revenue, reported on a one-month lag, was also off slightly “despite strong job creation and the lowest [unemployment] rate in many years.”
“Depressed collections can be attributed to a severe snow storm that closed most State retail stores and retail traffic for a full weekend late in the month of January,” the treasury said.
Source: Politico Pro