Friday, October 14, 2016
NOTES FROM THE SENATE, OCTOBER 14, 2016
WELL, IT LOOKS LIKE A TREND... DOWN
Last month, we reported the apparent slow-down in state revenues the first two months, but delayed pushing any alarm buttons until the September figures came in, hoping a full quarter of the fiscal year would indicate more clearly where the state is headed in this fiscal year. Maybe reading all of the negative news about national retail sales, restaurant sales, automobile sales and other signals of the domestic economy drives us to pay attention to the alarm signals we see internationally, but September's state revenue numbers are just plain alarming and the first quarter cumulative totals bear no resemblance to the vibrant numbers we saw almost all year in FY 2016.
Total state revenues grew only $48.3 million for the month over September of 2015 and the grand total gain for the month was a piddly 2.5%. It gets worse. When you reflect new DOT fuel tax revenues, actual growth totals less than 2.1%. And still worse, Individual Income Taxes, half of state revenues, which grew 7.9% for the entire FY 16 year, totaled only 0.3% in September and, not to rush into the YTD numbers, has grown less than 1% for the three months so far.
Net Sales Tax looks odd again this month, finishing 5.0% ahead, but the overall Gross Sales Tax growth is only 1.6%. So the difference comes in the local distribution... Corporate Income Taxes were negative again at minus 2.0%. Ad Valorem Tag/Title fees gained 17.8% or $14.1 million, the highest gaining category in September. Tobacco and Alcoholic Beverages were minus 0.7% and 14.3% gain, respectively.
Of course the new Fuel Taxes and Fees are in the base, so all that shows up now is the gain or loss for the month compared to the same month last year. Not a lot of difference as Fuel Taxes were up $6.6 million or 4.6% and Impact Fees gained slightly, $79,000. Hotel/Motel Fees gained $481,000 or 3.6%. Altogether those three increases account for $7.2 million of the $48.3 million gain for the month.
FIRST QUARTER NUMBERS ARE SOBERING
Maybe there are factors affecting the first quarter that are not apparent to this non-economist, and, if so, I hope they are more positive than I see here. But, as we said in the first paragraph, "it gets worse."
Total revenues gain for the three months total "only" $182.9 million. Now, you might say, that's not too shabby. If I have calculated more or less correctly, about $82.6 million of that $182.9 million gain comes from the new transportation revenues including the Excise Tax, Impact Fees and Hotel/Motel Fees. That leaves about a $100.3 million gain by quick calculations... So the real growth YTD is only about 1.95%.
And still, it gets worse... Individual Income Taxes (not affected by the Fuel Tax revenue changes) only grew 0.8% for the three months. And it appears to be closely tied to the slow growth of withholding taxes; again we see those as being reflective of the economy. The total gain for the three months for the Individual Income category totals only $21.4 million. And this bears repeating: that category accounts for HALF of state revenues.
Net Sales Taxes total a 4% gain but gross Sales Taxes start out at 1.1%... a lot more reflective of the actual Sales Tax growth number. Corporate Taxes are down minus 8.2% for the quarter, the largest change appearing to be the increase in refunds.
Title/Tag Ad Valorem Fees are healthy right now, showing a 14.9% gain for the quarter or $34.8 million, and is the largest gaining category outside of the Fuel Tax number. Tobacco and Alcoholic Beverages numbers are both positive for the three months at 0.4% and 3.4% gains respectively.
FUEL TAX TOTALS REFLECT 2015 "0" STARTING MONTH
Again, with the Fuel Tax collections now in the base, only the growth numbers show up separately. Because it took a month to reflect Excise Tax receipts in 2015, there was a one month gap... there are three months' totals this year compared to only two months in 2015. From then on, everything matched up month to month. For that reason, there is a gain in this quarter of $65.8 million which added to the gains of the Impact Fee of $549,000 and Hotel/Motel Fees of $16.2 million, accounting for about $82.6 million gain for the quarter. As discussed earlier, this only makes the rest of the revenue numbers look worse when these numbers are reflected.
WHERE IS ALL THIS HEADED?
Bottom line, the state's revenues, growing at a brisk 5.2% last year (FY 2016) without considering new DOT revenues, now show a miniscule 1.9% growth for the first quarter of the year.