Tax Revenue Drops Sharply in February, Now Up Just 2.4% for the Fiscal Year
Saturday, March 24, 2012 at 12:57 AM by Tamarine Cornelius
DOR Attributes Sharp Drop to Increased On-line Filing
The Department of Revenue (DOR) released February tax collection data today, and the numbers are discouraging. Compared to the same month of 2011, the February tax collections were down by $56 million or 12.3 percent last month! Most of the sources of revenue fell in February, but the total drop results primarily from a decline of $54 million in individual income tax collections last month – a decrease of 57 percent compared to February of last year!
DOR says the drop-off can be explained by the fact that 70,705 more people filled their returns electronically last month than in the same month of 2011. Early filers are generally owed refunds, so the use of electronic filing to speed up that process cut sharply into the net individual income tax collections. For the full fiscal year, individual income tax collections are still up by 2.4 percent, and the same is true for total tax collections from all sources.
I’m willing to shelve (for now) my concerns about the sharply lower individual income tax revenue, so I’ll turn instead to the sales and use tax figures. That was down $5.8 million last month, or 1.9 percent, despite the fact that February was a day longer this year. I think that’s a bit worrisome; but sales tax revenue bounces around and was up by more than $18 million in January, so I’ll try to shelve that worry as well.
The February 9th LFB report on the state’s fiscal condition projected that a slowdown in tax collections over the second half of the 2011-12 fiscal year will lower the growth for the full fiscal year to 2.2% (compared to the 3.0% growth forecasted last May, when the biennial budget was being crafted).
On a related note, a Rockefeller Institute report issued early this week provides preliminary state-by-state data on tax collections during the last quarter of calendar year 2011. Those preliminary figures show that tax revenue grew just 1.6% in Wisconsin in the fourth quarter, compared to the same period a year earlier, whereas the national increase was 2.7%.