The good news first: October General Fund collections exceeded the monthly estimate by $29 million, or 1.4%. For the fiscal year-to-date, the General Fund has a modest revenue surplus of $42 million, or 0.5%.
Much of October's surplus, $20 million of the $29 million, came from corporate tax collections, which fell slightly short of revenue targets in the previous month. Personal income and sales tax receipts also met October targets.
For the fiscal year-to-date, collections of the state's three major groups of taxes — personal, sales, and corporate — are all above estimate. Modest shortfalls of less than 1% were recorded for collections of the inheritance tax and taxes on tobacco, beer, liquor, and table games.
All in all, General Fund revenue collections are on track with official estimates four months into the 2013-14 fiscal year.
Now the bad news: General Fund collections are not keeping pace with the slowly growing economy, and much of this can be traced to corporate tax cuts.
Compared to collections through October 2012, fiscal year-to-date revenues have grown by an anemic $88 million, or 1.1%. Personal income and sales tax collections have grown by more than 3% in this same period, bringing in slightly over $200 million more than in 2012. While not surging revenue growth, these figures show the economy is expanding.
However, much of this revenue growth has been wiped out by a decline in corporate tax collections of $121 million, or 13.9%, during the first four months of 2013-14 compared to 2012-13. A large share of this decline is due to the 2013 rate cut to the capital stock and franchise tax. This tax rate is expected to be cut again in 2014 and 2015, making it potentially difficult for overall revenue growth to keep up with inflation in coming budgets.
So as prices and incomes rise, individuals will continue to pay their taxes, while many corporations pay less. This means fewer public resources to support our schools, hospitals, and other critical services.
So when lawmakers say this next budget season that there just isn't any money, remember that this is a choice.