Quick Take: Revenue collections recovering very slowly

The latest revenue collections announced today (PDF) by Treasurer Scott Meacham continue to confirm that while revenues are recovering from their precipitous drop during the worst of the downturn, the recovery is slow and far from complete.

September’s General Revenue (GR) collections totaled $459.7 million, which is $25.9 million, or 6.0 percent, above last year and $7.5 million, or 1.7 percent, above the certified estimate. For the now-completed first quarter of FY ’11, collections are running $74.8 million, or 6.8 percent, ahead of last year, and $45.4 million, or 4.0 percent, above the certified estimate that formed the basis of this year’s appropriations.

As can be seen from the first chart, monthly collections have come in between 5 and 10 percent above the same month for the prior year in four of the past five months. While this shows that a recovery is under way, the gains have been far less than we might hope given the magnitude of the drop between January 2009 and February 2010.

The extent to which this has only been a partial recovery can be seen in the next chart, which looks at monthly revenue collections compared to the average of the same month over the five previous years.

September’s collections came in at 82.5 percent of the September average for the five preceding years, falling below 85 percent for the second straight month. This also suggests that the revenue recovery may have stalled.

Finally, our third chart compares total GR collections for the first quarter of FY ’11 to the same quarter over the past While FY ’11 collections are up 6.0 percent from last year, they remain almost one-quarter (24.7 percent) below their pre-downturn peak and below their levels of six years ago. It is clear that it will be a long, steep, difficult climb until revenues have fully rebounded – and for now, it’s not clear whether we are on an upward ascent or just holding steady.

For our most recently updated 2-page Budget Trends and Highlights, click here (PDF). For our memo to political candidates and policymakers on the budget situation and recommendations for navigating the crisis, click here (PDF). For all our budget resources and information, click here.