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February refunds sink revenues
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On the February chart we all look at to follow revenues, the February number stands out since it is always a very low month, being only 28 days, and because it is well … February. In fact, the only really good thing about February is Valentine’s Day… but I digress.

Unfortunately, February’s revenues were even worse than the dismal February in 2009, falling some $62.1 million dollars and totaling only $567 million in revenues for the month. Taxpayer refund increases accounted for almost $50 million of the decline for the month. While the Revenue Department cites faster processing, there appears to be an increase in the number and amount of refunds, a fact that may not signal lower refunds nearer the end of the fiscal year.

Looking hard for that kernel of good news, we note some improvements in February.  Motor fuel taxes were up 10.4 percent and overall sales tax collections were only negative by -1.6 percent, although the state portion was negative at –12 percent. Within the sales tax categories, there were positive collections in food, 12.2 percent, automotive, 32 percent and home furnishings, 15.5 percent. Additionally, within the individual income tax category, (50 percent of revenues,) there were positives as well with individual withholding payments up $13 million or 2.1 percent and individual tax returns and other payments up $11 million.

Year to date, though, results continue to plummet. The DOR tax collections show a $1.348 billion deficit for the year thus far with four months to go. Individual income taxes are down 12.2 percent and gross sales taxes are down 10.6 percent with the state portion down 13.5 percent. Motor fuel tax collections are also down 13.8 percent. So, no good news yet.

Governor lowers FY2010
and FY11 revenue estimates
While the governor lowered the FY2010 Revenue by $342 million this week, this is still a fairly optimistic expectation for the balance of the year.

Taking into account Treasury numbers, the current shortfall is about $200 million and the state cannot fall short of revenue projections for March, April, May and June by a total of more than $142 million. That’s pretty optimistic given the increased refunds expected this year … and the fact that revenues a year ago for those last four months would have been lower but for the delay in processing refunds.

The prediction here is that the state does not see marked improvement until the refunds have run their course, or in July, whichever comes first.

Senate action last week
The following legislation has passed the Senate:  
• SB 346: Would establish statewide uniformity of assessment notices and appeal forms and require that every property owner receive a notice of assessment each year with an estimate of property tax. Property owner’s allotted time to appeal would be extended to 45 days and any increase in assessments would require a unanimous vote from the county Board of Equalization. The appraised value for a home sold through a standard, “arm’s-length” transaction could not be raised for a year after sale. Counties would be allowed to accept payment plans for property taxes that could include a discount for early payment. Tax assessors would be required to include all comparable sales, including foreclosures and bank sales, in determining property value. Would offer a streamlined appeal option for property in excess of $1 million in value. Allows for automatic taxpayer victory on appeal if government fails to respond within 45 days. Requires that only “current use of property” is used in determining fair market value. This legislation does not include any caps on assessments.  
• SB 340: The Student Finance Commission would be required to notify parents of ongoing HOPE eligibility from ninth grade on based on data from public and private schools.  
• SB 298: Adds basic first aid in health instruction in grades K-12.
• SB 334: Creates a new crime of medical fraud specific to theft of someone’s health care records.
• SB 370: Provides for programs and rules/regulations and incentives for voluntary water conservation and enhancement of the state’s water supply.
• SB 400: Provides that juveniles will receive credit for time served in secure detention before conviction.

Awaiting governor’s signature:
• HB 906: Allows local boards of education a one-month extension when offering a teacher employment contract.

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