If you are looking for good news, you might want to check the stabilizing unemployment rate or the housing market beginning to move a little or possibly some retail sales perking up — but don’t look at the state revenue picture for any encouraging news here at 10/12th’s of the 2009 year mark.
April’s revenues were down 20.6 percent, or some $362 million under April 2008. This is very disturbing and only follows the sharp decline of the last 6 months. For the month, individual income tax collections were down 16.9 percent, or $159 million. Sales tax collections overall were down 11.1 percent, with the state portion down 24 percent. Local sales tax distributions were actually up $34 million, or 10.5 percent.
Corporate tax collections were down $39 million or 33.1 percent. Motor fuel collections continue the slide downward winding up at $25 million down for the month or 29.4 percent, heavily weighted by the decline in the motor fuel sales tax that is tied to the lower fuel price this year.
One of the telling numbers to come out of the revenue report is the number of individual returns filed — some 166,000 fewer than April 2008. It is not clear if the reduction in the number of DOR employees to process returns has had any effect in creating a backlog.
The total revenue for the month of $1.399 billion was only the fifth highest month this fiscal year, while in 2008, April was the second highest month all year.
Year-to-date figures point to problems now and ahead
Year-to-date numbers are even more depressing, if that is possible. They show the sharp angle of decline on a graph starting cumulatively in November at -1.5 percent with a decline of 3-4 percent monthly and now totals a -9.5 percent decline from FY08 YTD. Total revenues for the FY09 YTD are down $1.36 billion over the same 10 months through FY08. The state stands at just under $13 billion in collections with just two months to go.
Individual income taxes are down $704 million, or -9.8 percent. Sales tax collections are down overall $599 million, or -6.7 percent, with state collections down 8.3 percent. Corporate tax revenues YTD are down 26.3 percent, or $261 million. Motor fuel revenues of sales tax and excise taxes are down $103 million, or -12.3 percent. The general budget has to make up this difference at year’s end.
As of today, the budget is eating into the shortfall reserve fund by some $90 million. If the last two months follow the trend of the last six months, the state could easily use up most of the remaining $562 million in reserves in the rainy day fund.
Not only is the cumulative -9.2 percent revenue line for FY09 under the revenue estimate for this fiscal year, the revenue level is also under the projected budget level that the 2010 budget is based upon.
Sobering decisions ahead if trend continues
If July rolls around and the rate of decline in revenues has not leveled off and if the state reserves are essentially gone, the FY10 budget as passed is almost surely to be up for review. If our best guess is that we have reached a new equilibrium at a lower budget level of say $14 or $15 billion, then some very tough decisions will be required. A revenue level at $14 billion or $15 billion, would require a new review of the state’s priorities from top to bottom.
Governor vetoes few budget items
Gov. Perdue signed the $18.6 billion state budget for FY10 on May 13 and only vetoed three items, a signal of how little new funding there was in this budget.
$25,000 for the Ga. Games Commission
$250,000 in bonds for the Herty Foundation in Savannah
$1.6 million in bonds for a project at Darton College
A review of the 2010 budget and vetoes will be forthcoming.
I may be reached at
234 State Capitol, Atlanta, GA 30334
(404) 656-5038 (phone)
(404) 657-7094 (fax)
E-mail at Jack.Hill@senate.ga.gov
Or call toll-free at
1-800-367-3334 day or night
Reidsville office: (912) 557-3811