Tax Collections Improve in December, Up 2.6% in First Half of FY 2012-13
After a couple of weak months, state tax collections were considerably stronger in December. According to the monthly report issued today by the Wisconsin Department of Revenue (DOR), General Fund tax collections grew by 8.9% last month (compared to Dec. 2011), and collections for the first half of the current fiscal year are up by 2.6%. The latest DOR report is reassuring after small dips in tax collections in October and November reduced the aggregate growth for the first five months of FY 2012-13 to just 1.0%.
For the first half of the current fiscal year, individual income tax revenue has now grown by 4.3%, corporate income tax revenue is up by 2.0%, and sales tax revenue is up just 1.6%. Excise taxes have dropped by 4.2%, and a category called “other” – which includes estate and utility taxes and real estate transfer fees – has fallen by 5.3%.
If tax collections slow again in the first half of this year, that wouldn’t necessarily be a reason for significant concern, thanks to the fact that tax revenue exceeded expectations in 2011-12. From that stronger-than-anticipated base level, we need just 1.2% revenue growth ($160 million) over all of this fiscal year to reach the 2012-13 revenue level projected in May 2012. As a result, even if taxes collected over the next six months merely match the collections in the same period a year ago, the state would hit the revenue target for this fiscal year and would finish the current biennium with a significant General Fund balance.
Of course, I hope that the state continues to have growth of 2.6% or more for the full fiscal year, rather than an average for the full year of just 1.2%. The higher current rate would increase the projected budget balance and would strengthen the revenue base we are building from in the coming biennium. In light of some of the fiscal challenges in 2013-15, starting with a stronger revenue base would be a very welcome development.