Quick Take: February revenue collections show continued growth but full recovery remains far off

Yesterday, State Finance Director Preston Doerflinger announced state General Revenue (GR) collections for February.  The news was generally positive. February’s collections came in 12.0 percent higher than one year ago; this was the eleventh straight month that monthly GR collections were up compared to the prior year. However, February’s growth was not quite as robust as that seen in January, when collections rose by 19.5 percent.Looking at the major taxes that are deposited to the General Revenue fund, personal and corporate income tax collections came in well above last year.  However, February income tax collections are always low due to payments of tax refunds, so the amounts involved – $27.7 million in personal income tax collections and $0.9 million in corporate collections – are quite minimal. Gross production taxes from natural gas and oil came in below last year, as strong oil revenues failed to completely make up for lagging natural gas collections (see this recent blog post on gross production tax revenues).  Even with the winter blizzard that crippled the state for a good part of the month, sales tax collections continued to fare well, coming in 11 percent above last year.  For the fiscal year to-date, personal income tax collections are still growing most slowly of the major taxes, despite February’s strong performance:

February collections also surpassed the certified estimate by $8.7 million, or 3.6 percent. Income taxes came in well above the estimate while gross production and motor vehicle taxes fell short. For the year, GR is $100.8  million, or 3.4 percent, above the estimate.  Since the Legislature only appropriates up to 95 percent of the certified estimate, there is now virtually no chance of the state facing another mid-year revenue shortfall in FY ’11. Instead, it seems increasingly likely that revenues slightly exceed estimates for the year, allowing for a deposit of the surplus in the state Rainy Day Fund in July.

It is important to bear in mind that revenues are far from fully recovering from their deep plunge during the downturn, notwithstanding the steady growth in collections through the first two-thirds of FY ’11. Year-to-date collections remain $709.5 million, or 18.6 percent, below FY ’09 and are less than the comparable period six years ago, in FY ’05:

For our newly updated 2-page Budget Trends and Highlights fact sheet, our downloadable presentation on the state’s budget outlook and other materials, please check out the Current Budget Information page of our website.