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Cautionary good news
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The August revenue numbers have some good news in them with overall revenues up 12.7 percent, or $133.3 million increase over August 2009.
There is reason for caution because of the $160 million in refunds that were paid out in July and August of last year that reduced collections last year and made the difference larger this year.  
But as in football, a win is a win, no matter how many penalties or how weak the opponent.  Just ask the University of Mississippi! And as you look inside the two big categories, individual income taxes and sales taxes, there really is reason for encouragement.

Income taxes—August
Income tax collections for the month were up $122.1 million or 24 percent, with, again, the caveat of the payout of refunds a year ago. For example, individual income refunds in August totaled only $50.7 million as opposed to $162.2 million in August of 2010. The number of refunds dropped 289,420 or 48.7 percent. Individual income tax payments did drop from 199,970 in 2010 to 188,388 in this August. Payments in dollars totaled $676,269 this August, a slight increase over last year of $11,613 ... some good news.

Sales and use taxes—August
Overall sales and use taxes were up for the month $19.5 million or 3.3 percent. Local distribution was up slightly at $3.4 million but the state portion was up $19.5 million or 4.8 percent — more good news. Inside those numbers most categories were up for the month: Food, up 3.4 percent, accommodations, up 17.7 percent, general merchandise, up 5.6 percent, automotive, up 5 percent and utilities, up 6.1 percent. Decreases for the month included home furnishings down 9.8 percent, construction, down 4.9 percent and manufacturing, down 10.4 percent.     

Other categories in August
Motor fuel collections were up a total of 22.2 or $14.6 million Excise taxes were up 4.8 percent and motor fuel sales taxes were up $12.8 million or 43.9 percent. Interestingly, year to date, the total number of gallons of fuel sold is down -2.1 percent. Corporate income taxes were down $27.0 million but the third month of this quarter is usually the high month, so it will be next month before there is a clear trend. Tobacco taxes were up 12% and alcohol sales taxes were down 3 percent.

Year to date — not bad
Total revenues year to date (YTD) are up $184.4 million or 8.6 percent remembering the factor mentioned earlier about the disparate refunds totals. Individual income taxes are up 13.7 percent with total refunds down by a whopping 289,420 returns with the dollar amount down by $172.1 million. So the amount of difference between refund dollars is $172.1 million and makes up most of the gain of $184.4 million increase so far. YTD Individual income taxes are up $140.7 million or 13.7 percent, not so good considering the aforementioned factor. Sales taxes are up 3.1 percent overall or only $49.1 million but still positive. Distributions to local governments are down 2.9 percent but collections going to the state increased by 3.6 percent — that’s a positive. Motor fuel taxes YTD are up 23.3 percent with the breakdown of excise taxes up 7.1 percent and gasoline sales taxes up $25.4 million or 45.5 percent.
Next month the end of the quarter corporate collections will show whatever trend there is. YTD, tobacco tax collections are down 4 percent and alcoholic beverages collections are down 2.9 percent.

So, how is the state doing?
After 20 plus months of almost continuous declines, leveling starts to look pretty good.  And that is apparently what is happening. Because of a couple of factors, it will be November before we have a clear picture of the direction and velocity of revenue collections. Remember there is already revenue growth built into the 2011 budget of 5.09 percent. So that is the break-even point. The 4 percent withholding of allotments the governor has already implemented is supposed to cover the shortfall of $140 million in the FMAP (Medicaid Match) recently extended by Congress. So, again in football terms, we are “moving the chains” but not in the red zone yet, not close enough to score.

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