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Friday, June 08, 2018

NOTES FROM THE SENATE, JUNE 8, 2018

REVENUES ENDING YEAR WITH A WHIMPER

May's revenues report completes 11 months of the fiscal year and while the level of refunds going out of the treasury can affect the revenue total, you just get the feeling that revenues are slowing to a crawl. May's revenues totaled $1.7 billion but increased only $31.4 million or 1.8%. Individual Income Taxes, half of state revenues, limped in at a 1.4% increase. Inside those numbers, Refunds were up $26 million. An encouraging number was Individual Withholding payments, up $43.3 million. Individual Income Tax payments were down $7.9 million. Corporate Income Tax, a relatively small category, gained $5.2 million.

Net sales taxes continued consistent at 3.3% growth on revenues of $494.6 million for the month. Title Ad Valorem Taxes were negative slightly at -$1.8 million. The Tag, Title and Fees category was up $2.4 million. Tobacco and Alcoholic taxes were up 0.3% and 4.1% respectively.

FUEL COLLECTIONS UP

Motor Fuel Taxes were up $4.8 million or 3.3%. Highway Impact Fees were down -$463,000 and Hotel/Motel Fees were up $447,000. Total funds going to Transportation were up $4.9 million or 2.9%.

YEAR TO DATE NUMBERS STILL POSITIVE

Total State revenues topped $20 billion after May, a gain of $940.7 million or 4.8% for the Fiscal year with one month to go. It's hard to find anything not to like about those numbers. Individual Income Taxes are up 6.8% and Corporate Taxes up 5.5%. Net Sales Taxes are up 3.5%, but Title Ad Valorem Taxes are negative at -7.3%, while Tag, Title and Fees are positive at 8.7%. Tobacco and Alcoholic Beverages are both positive YTD at 1.5% and 1.0% respectively.

FUEL REVENUES POSITIVE FOR THE YEAR TO DATE

Motor Fuel Taxes YTD are up 3.1%, Impact Fees, negative at -1.5% and Hotel/Motel Fees positive at 1.6%. Altogether the total of taxes and fees going to Transportation are up $51.2 million YTD or 2.9% with a total of $1.8 billion in collections.

SLOWING TREND OBSCURED BY TAX-RELATED OVERPAYMENTS?

Here is a list of the month by month revenues percentages.

Gain or Loss Cumulative Average
YTD
July 7.1% ----
August -0.2% 3.3%
September 3.1% 3.2%
October -3.25% 1.6%
November 7.3% 2.7%
December 10.0% 4.1%
January 16.7% 6.2%
February 4.8% 6.1%
March -0.5% 5.4%
April 2.2% 5.0%
May 1.8% 4.8%

When you review the year month by month, the first thing you notice is that three months were negative months. The second thing is two unusually high months in December and January. There is some feeling the federal tax cut and taxpayers' reactions might have resulted in an attempt to prepay some taxes in order to be able to deduct the amounts in their 2017 tax return. This phenomenon was felt nationwide as states reported unusually large increases in revenues. The third and most concerning trend is in the last few months and the consistent slowing of revenue growth. The last three months have languished at -0.5%, 2.2% and 1.8% growth. With only one month to go in the FY 2018 Fiscal Year. June's revenue report will be very important in finishing the 2018 FY and setting the tone for the new year.

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