New revenue numbers: Still waiting to exhale

We may never have expected to see the day when the announcement that monthly revenue collections had come in 16.7 percent below the prior year and 20.8 percent below the certified estimate would be taken as good news. But after the pummeling that revenue collections have suffered over the past 12 months,Treasurer Scott Meacham may be forgiven for putting a positive spin on January collections that were announced Tuesday:

Meacham said January’s numbers are somewhat encouraging, even though they remain below prior year collections and the official estimate.

“We’re not out of the woods yet, but we are seeing some positive movement,” he said.

Unfortunately, we can’t share the Treasurer’s optimism. It is true that compared to the last 12 months, January’s collections came up considerably less short compared to prior year numbers and to the certified estimate. But the improved performance compared to the same month last year (January 2009) reflects that we are now a full year into the revenue downturn, which means that comparisons are to a deflated base.  Meanwhile, the improved performance compared to the estimate is largely due to gross production tax estimates for January being only $12.8 million, compared to an average estimate for the first six months of the year of $54 million. If January’s gross production tax revenues had been estimated at the same amount as December’s estimate ($45.4 million), January’s collections would have been 27 percent below the estimate, along the lines of previous months.

In order to control for some of these factors, we pulled together the data comparing monthly revenue collections for each of the past 19 months to the average collections for the same month over the five previous years.

January’s collections of $410.4 million were just 77.0 percent of the average of $531.2 million over the five years between FY ’04 – FY ’09. By this measure, January actually stands as the second worst month of the downturn behind only September 2009 (76.5 percent), faring slightly worse than the three prior months.

There is no single definitive way to interpret these numbers. But all who were holding their breath in hopes that January’s collections would provide a clear signal that the long-awaited revenue recovery is now clearly underway must keep waiting to exhale.