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Growth meeting budget estimates
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May revenues came in with a 3.1 percent gain as the middle month of the fourth quarter drifted closer to the end of the fiscal year in June. At $1.3 billion for the month, state revenues produced a gain of $42.2 million total.

Individual income tax category came in at a 3.1 percent growth for May, producing only $20.5 million in gains on revenues of $675.5 million. Within that category, IIT payments were up $5.5 million or 17 percent, and tax refunds were down 21.4 percent or $34.2 million. Withholding taxes were down $11.5 million or 1.5 percent.

Sales taxes showed positive for only the second month since the title/tag fee replaced sales taxes on automobiles in March 2013. Sales taxes were up $10.4 million for the state portion, showing a 2.5 percent gain.

Motor fuel taxes continued positive, at 3.2 percent as excise taxes totaled 4 percent gain and sales taxes 2.6 percent. Motor fuel taxes totaled $95.0 million for the month. Corporate income taxes were negative $19.3 million on revenues of $7.4 million. Corporate payments were down $16.2 million as were estimated payments. Tobacco taxes were down 9 percent as alcoholic beverages were positive at 9.4 percent.

Tag/title fee gained $21.3 million for the month and when combined with the sales tax category, produced an “effective sales tax rate” of 6.29 percent on a total gain of $31.7 million.

Year-to-date revenues top estimate of $93M
With 11 months of the fiscal year complete, state revenues total $16.1 billion versus $15.4 for calendar year 2013, producing a net gain of $696,989 or 4.5 percent YTD.  These revenues are running about $93 million ahead of the revenue estimate needed to make budget. It is true 4.5 percent sounds pretty good, but there has to be some concern with individual income taxes only showing a 1.5 percent gain YTD on revenues of $8 billion, with only a $118.5 million gain.

Sales taxes so far are negative at -3.8 percent on $9 billion in revenues. When combined with title tag fees, an “effective sales tax“ total shows a combined 8 percent gain for the year-to-date.

YTD, motor fuel taxes are up 3.9 percent or $34.5 million on collections totaling $929.6 million. Looks like motor fuel taxes will meet the $1 billion appropriated in the FY15 budget.

Corporate income taxes show a YTD gain of $102.8 million for the year, an increase of 16.1 percent. Tobacco and alcoholic beverages are both up YTD, 2.3 percent and 2.1 percent respectively. As noted earlier, tag/title fees total $987.2 million for the year, gaining $620.9 million for the year through May. It is sobering to consider that of the total increase for the first 11 months of $696.9 million, the tag/title fee makes up $620.9 million of that total or almost 89 percent.

What is the view ahead?
A rolling average for the previous 12 months shows revenues increasing at a decreasing rate. It will be interesting to be able to compare sales tax numbers outside of the huge difference in tax rates with title tag fee due to the change over in taxing to fees on new and used cars a year ago. From here on, though, a better, more balanced view will be possible. It has been difficult to sort everything out the past year.

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