By the numbers: FY'10 revenues down..from FY'01

Last week, Treasurer Scott Meacham presented the preliminary data on full-year collections to the state’s General Revenue fund for FY ’10, which ended June 30th.  He emphasized both the magnitude of the decline in collections from the prior year – $945 million, or 17 percent – and the shortfall in collections compared to the initial certified estimate for the year, which, at 15 percent, may have been the largest mid-year shortfall in state history.

We’ve now gone further back to see where the drop in state revenue collections leaves us. The numbers are pretty striking:

Last year’s GR collections were the lowest since FY ’04 and were lower than nine year earlier, in FY ’01, the year preceding the last recession-induced fall in tax collections.

The drop in GR collections reflects two developments in addition to the economic downturn. One is the effect of the permanent income tax cuts enacted between 2004-06, which have dampened revenue collections by several hundreds of millions of dollars annually. In addition, the Legislature has opted in recent years to apportion a growing share of tax collections to specific purposes, including roads and bridges, higher education scholarship, and the teachers’ retirement system.  We calculate that these apportionment decisions have reduced General Revenue collections by $300 million in FY ’10.  Yet even if these amounts were added to this year’s totals, FY ’10 collections would be a mere 4 percent above FY ’01. By contrast, compared to 2001, the Consumer Price Index is over 22 percent higher and the state’s population has grown by at least 6.5 percent. The state’s overall economy, as measured by state personal income over the past four quarters, is almost 50 percent greater than it was nine years ago.

This chart, along with one that looks at annual GR collections by major tax for the past five years and includes projected collections for FY ’11, is part of the revised budget outlook presentation that you can view online or download as a PDF. We also have prepared an updated 2-page fact sheet of the main budget numbers and policy points.