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A slip in revenues for August
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Maybe it is the rain or historically cool temperatures in August or the sales tax holiday, but state revenues slipped to 2 percent growth this month on total revenues of $1.34 billion, showing only a $26.9 million gain for the month. So, the two-month total gain of 4.4 percent has slipped below the 5 percent target rate the fiscal year 2014 budget was predicated upon when passed. Subsequently, total FY13 collections beat estimates and relieved some of the pressure as actual collections indicate that FY14 would need to grow by closer to 3.5 percent, so 5 percent growth is desirable but not necessary to meet the budget.

Individual income taxes totaled $699.5 million but showed a negative 1.3 percent difference under August 2012. According to the governor’s press release, individual income tax payments were down $25.7 million while refunds were down as well by $9.5 million.

Net sales tax collections to the state were down $38.8 million or -8.7 percent for the month. But when the increase in title fees is added back to the net sales tax collections, there is an effective gain of $20.2 million or 4.2 percent for the month.

Motor fuel taxes showed a small decline of 0.2 percent or -$150,000. Essentially the collections were flat at $82.5 million for the month.

Corporate tax collections were up $3.3 million or 28.3 percent for the month but a quarterly look is historically more accurate. Corporate payments were up $5.7 million and corporate refunds were down $10.5 million. Other categories were down $12.7 million.

Tobacco taxes were up 13.3 percent, as were alcoholic beverages at 6.2 percent, although both are very small totals, around $25 million for both categories.

Showing strong growth was the tag/title fee which was changed on new and used automobiles in March of 2013 when sales taxes were abolished, as were ongoing ad valorem taxes on autos. August saw a total of $87 million collected versus $27.9 million for August 2012, a gain of some $59.1 million, which can be attributed to the change.   
Year-to-date—just a bump or trend?
After two months of the fiscal year, total revenues stand at $2.75 billion with a gain of $115.3 million for the period, a gain of only 4.4 percent. In 2012, the gain at the end of August was 4.6 percent, just slightly more than this year’s 4.4 percent gain. Of course 5 percent is the target growth rate, so anytime the cumulative rate falls below the 5 percent rate, this is concerning. May be just a speed bump but September numbers, and the resulting first quarter results, will be closely watched. YTD, the individual income tax category, where half the state’s revenue comes from, shows only a 3.6 percent growth or $50.8 million on revenues of $1.45 billion.

YTD, net sales taxes show a decline of 7.6 percent, or -$69.1 million, on revenues of $838 million. But when the increase in tag/title fees is added back to the net sales tax figure, the category shows a gain of $52.2 million or an effective gain of 5.4 percent. So the change from sales taxes on automobiles, new and used, is having a positive effect on state revenues so far, it seems.

YTD motor fuel taxes are up $8.3 million or 5.2 percent with both categories, excise and sales tax, up for the two months.

Corporate income taxes show slightly negative YTD at -1.8 percent, but a quarterly figure available next month may give better insight into trends.

Tobacco taxes are up $11.9 million and alcohol taxes are down slightly at -1.0 percent.

The title/tag category, mentioned earlier, has produced $121.3 million in increased fee revenue for the state while sales taxes have been reduced. It looks like the net effect is positive.

So, July and August are in the books and the somewhat disappointing month in August will make September’s numbers even that more important as the first quarter of FY14 closes.

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