A Little Bit of Good Budget News !!
Wisconsin has gotten a string of bad news about its fiscal situation over the last two weeks, so I feel compelled to report on one bit of somewhat positive revenue news. The Dept. of Revenue (DOR) released June tax collection data this week, and their figures show that last month’s tax collections were 3.9% ahead of June 2009, bringing revenue for the full fiscal year very close to the projections made in January.
For much of the 2009-10 fiscal year, which ended on June 30, tax collections trailed the 2009 level. However, the state closed the gap over the last few months. According to the latest DOR numbers, which aren’t quite the last word on the 2009-10 tax collections, the state finished the fiscal year $1 million below the previous year, a miniscule difference in state budget terms.
The last Legislative Fiscal Bureau projections from January of this year had assumed General Fund tax growth of about $19 million in 2009-10, so the state might be about $20 million short of the projection, but we’ll probably need to wait a month or so before we get a firmer picture of that. A difference of $20 million might sound like a lot, but in the context of estimating $12 billion per year in taxes during very turbulent times, that’s about as close to a bull’s-eye as one can reasonably expect.
The changes in tax revenue since 2008-09 vary a great deal for the different types of taxes:
— Individual income tax revenue is down 2.2%.
— Sales tax revenue is down 3.9%.
— Corporate income taxes are up 26.9% — because of a rebound in corporate profitability, as well as the closing of a couple of corporate tax loopholes in the last budget bill.
— Excise taxes are up about 17% – because of the last increase in cigarette and tobacco taxes.
The upward trend in total tax collections over the last few months is a positive sign for the 2010-11 fiscal year. But keep in mind that the state needs 5.5% tax growth this year to reach the tax collections assumed in the budget bill. I have some doubts about whether the shaky economic recovery will allow the state to achieve that, but the fact that the 2009-10 projections were almost dead on target makes me much more optimistic about the state’s chances of finishing the biennium pretty close to the estimate.