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On Wednesday, the governor released revenue figures for September, totaling $1.6 billion for the month. When September for FY09 is compared to the previous year, it looks as if revenues were up by 4.5 percent for month-over-month.
Year to date figures over FY08 are at -2.6 percent, up from -6.8 percent in August. The FY09 budget is now being based on a –1 percent figure totaling $17.4 billion.
September’s revenues are hopeful but there is reason for caution, particularly when looking at the month-over-month numbers because this year the Department of Revenue (DOR) implemented several changes in processing tax returns.
• Switching to an outside vendor to process individual income tax returns has led to faster processing of returns. This means that items that would have been processed in October last year were actually processed in September. This trend will continue throughout the year, shifting revenues back by a month, but we will see a smaller true up at the end of the fiscal year.
• As mentioned in the column on sales tax, DOR has changed its methodology for distributing sales taxes to local government, going from an estimated calculation to remittance of actual collections. This switch will have the same effect as the processing switch for income taxes: FY09 will seem higher compared to FY08 initially, but there will be a much smaller true up at the end of the year.
Readers should consider that this phenomenon has been going on for all of FY09 and that month to month comparisons are difficult at best.
A better indication of revenue performance is to examine the year to date numbers. According to the Senate Budget and Evaluation Office calculations, if the state continues to be at -2.6 percent growth, revenues will be $1.95 billion under the original budget. Currently, the state is operating under the assumption of a $1.6 billion shortfall.
Keeping in mind the problems mentioned above, here are the revenue figures for September:
• Individual income tax payments were up $32.4 million as compared to September FY08. This is an increase of 3.9 percent, the first positive increase this fiscal year.
• For the first quarter of FY09 revenues from individual income tax receipts are down $52 million, or -2.4 percent over the first quarter of FY08.
• Sales and use taxes were up by $16.4 million compared to September FY08, a 2 percent increase. In sales tax categories, utilities were up 16.2 percent and “miscellaneous” was up 36.4 percent. These were the only categories that had gone up month over month, indicating that these categories are “picking up the slack” for all of the other categories, which were down including food.
• It should be noted that the Department of Revenue uses antiquated commodities codes for categorizing what type of good is being sold. For example, a wide variety of computer and home electronics are categorized as miscellaneous. DOR has indicated that they will soon be switching to a more modern system.
• Motor fuel funds are down $1.1 million month-over-month and are down by -5 percent year to date. Readers should note that September figures actually reflect collections for August, so we will not see the effects of the metro Atlanta gas shortage until October or November.
So September was a good month, but there continues to be concern over the economic situation nationally and in Georgia.