2010 not starting well: July revenue figure drop 10 percent

State revenue collections in July fell nearly 10 percent compared to July 2008, a negative harbinger to the beginning of the new fiscal year.

Gov. Sonny Perdue announced last Tuesday that the first full month of the 2010 budget year saw the state’s stream of personal and corporate income taxes and sales taxes fall 9.6 percent.

It is the eighth consecutive month of declining state revenue.

That’s the bad news. The good news — if one can call it that — is that the drop in year-to-year revenue is in line with estimates and with the cuts the state has already made.

“This is in line with the reductions that have been made already based on revising the revenue estimate down,” Perdue communications director Bert Brantley said. “The other thing to remember is that July, August, September of last year were still relatively decent months. We hadn’t hit the free-fall yet.”

Those cuts have included orders that all state employees take at least three furlough days and that agencies prepare for an average of 5 percent cuts to their new budget that took effect July 1.

Perdue and state lawmakers wrote a 2010 state budget assuming little to no revenue growth over 2009. But as the books were closed on the 2009 fiscal year that ended June 30, the governor was forced to fill a gap in tax collections. Most of that shortfall was filled with dwindling state reserves.

But the governor and state economists predicted more bad economic news for the rest of this calendar year and ordered agencies to make cuts in anticipation of that. Tuesday’s news confirmed their fears.

“There is some projection of a slow rebound later in the fiscal year, so if these numbers start to rebound a little bit, then it will be in line with what we’ve done already,” Brantley said. “The fear was the 15 to 20 percent reductions we’ve seen in the past.”

For July, revenue collections totalled more than $1.096 billion, compared to $1.213 billion in the same month a year ago. Personal income taxes were down more than 8 percent while sales taxes fell 9.7 percent.

A positive sign was in corporate income taxes, where collections were actually up 10.4 percent. That represents a major turnaround as business tax collections for the fiscal year that ended June 30 were off by more than a quarter over fiscal 2008.

Tobacco and alcohol taxes continue to be another positive revenue stream, as collections of those so-called “sin” taxes grew 24.8 percent and 6.8 percent, respectively.

One comment Add your comment

[...] July shows a 10 percent drop in state revenue. [...]