Revenue figures: A tale of two half-years

Treasurer Scott Meacham today released revenue collections for the final month of the just-completed fiscal year, FY ’09. As was widely expected, the numbers were dismal: June General Revenue (GR) collections came in 30.1 percent below last year and 26.2 percent below the estimate.

As the chart that we have prepared shows, June’s numbers marked the sixth straight month of increasingly weak collections. Over the first half of FY ’09, revenues came in 8.6 percent above the prior year; over the final six months, collections were off a whopping 27.5 percent. For the full year, GR was down 7.3 percent compared to the prior year and was off 7.2 percent from the certified estimate.

The question that already has people’s attention concerns the revenue outlook for the current fiscal year that began July 1st. Will we hit the official estimate, or at least come close enough to avoid having to declare a mid-year budget shortfall and start reducing agency allocations and/or accessing the Rainy Day Fund? The Treasurer indicated today that he anticipates that a revenue shortfall is probable.

It will all depend on the timing and extent of the economic recovery. But given the consensus forecast of the recovery beginning towards the end of 2009 and gaining steam in 2010, the likelihood is that the FY ’10 revenue picture will look like a mirror image of FY ’09, with revenues under-performing during the first half of the fiscal year and then rebounding during the second half.