June revenues show improvement
State tax collections finished the 2013-14 budget year in June falling $29.89 million below projections, but June revenue collections show hints of an economy that is slowly starting to improve, Deputy Revenue Secretary Mark Muchow said Wednesday.
June tax collections of $419.28 million came in $27.43 million ahead of estimates, fueled by increases in collections of consumer sales taxes and personal income taxes — two taxes that are key predictors of the state of the state’s economy.
June tax collections were up 25 percent over June 2013, he said.
“We had a really good month for both consumers sales taxes and personal income taxes,” Muchow said.
Because sales taxes are remitted for the previous month’s sales, June’s figure represents an upturn in retail sales in May, he noted.
Sales tax collections of $100.88 million came in $7.48 million over estimates, while personal income tax payments of $151.77 million appeared to be $11.2 million under projections.
However, Muchow said $11 million of personal income taxes were transferred to the state’s Income Tax Reserve Fund, and don’t appear as revenue on the June revenue collection report.
The Income Tax Reserve Fund was set up to assure timely payments of state income tax refunds, but the Legislature emptied the fund in 2013 to help balance the budget.
Corporate net and business franchise tax collections of $32.37 million fell $17.4 million below projections, in part because the state paid out an unusually high $11.7 million of tax refunds to businesses in June, Muchow said. The June collections also reflect an on-going phase-out of the business franchise tax, and phase-down of corporate net taxes, he said.
Meanwhile, June severance tax collections of $80.5 million were more than $50 million ahead of estimates. However, Muchow said much of that was a timing issue, with $30.9 million of May payments being booked in June, since the payments were due May 31, which was a Saturday.
Nonetheless, Muchow said severance taxes were the best-performing tax for the fiscal year, with fiscal 2013-14 collections of $488.68 million coming in $57.28 million above projections.
Severance taxes from natural gas production jumped 115 percent from fiscal 2012-13, fueled by the Marcellus Shale drilling boom, while severance taxes on coal dropped 11 percent, primarily driven by falling coal prices, Muchow said.
Overall fiscal 2013-14 tax collections of $4.106 billion fell $29.89 million below estimates, and marked the second straight year that total tax collections have declined from the previous year, he said.
While the state economy is showing signs of picking up, Muchow said state revenues are about midway through a four-year downturn.
“I think the next couple of years, fiscal years 2015 and 2016, are also going to be difficult years,” he said.
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