Are FY 2012 Collections Above or Below Estimates? June Numbers Can Help Answer That Question
Lost in the haze of the governor’s “endless summer” tour touting tax cuts and the political bickering that it’s created is a crucial piece of information: a report from the administration on how revenues fared in June, the final month of the 2012 budget year.
Earlier this month, the Office of Legislative Services (OLS) warned lawmakers that the June numbers weren’t pretty. It advised that through June, FY 2012 revenues could be so low that the surplus available for the recently approved 2013 budget could be cut by $200 million. The governor’s office attacked OLS once again, asserting that FY 2012 revenue from sales, corporate and income tax was actually $85 million above the revised estimates.
The governor himself stepped into the tempest, telling the Record on July 6 that he will able to close the argument about this year’s budget later this month if June tax collections are good. “If we hit our numbers in June, maybe it’s time for them to shut up,” he said. By then, the governor should have already had an early indication of actual collections.
If he had encouraging preliminary numbers, the one has to wonder why they have not been formally released, as they would bolster to the governor’s claims that the state can afford a tax cut.
As we noted in early June, the chances that tax collections that month could meet the administration’s targets for the year were slim:
• Corporate business tax would have had to grow by 15 percent, even though it had only grown by 1.8 percent in the prior 11 months.
• Sales tax would have had to grow by 8.3 percent, even though it had only grown by 2.4 percent in the prior 11 months.
• Income tax would have had to grow by 4.3 percent, even though it had only grown by 2.4 percent in the prior 11 months.
Typically, administrations are quite casual about releasing tax collection reports during the summer. In fact, despite the governor’s Executive Order requiring the release of a monthly revenue report, this administration has never provided a revenue report in July.
Given the controversy over the revenue projections, and the huge impact collections will have on the feasibility of a tax cut, the administration is obliged to provide timely and accurate information on June’s numbers. Without them, we do not know if revenues are nearly $200 million below the administration’s estimates for FY 2012 or $85 million above them – a difference that will shape just how large the FY 2013 shortfall becomes. If OLS is correct, the $200 million gap this year will result in a FY 2013 shortfall of at least $400 million, and possibly even more if growth in FY 2013 is less than the administration’s optimistic projections.
Full Disclosure: As State Treasurer in 2008 and 2009, my office did not release any revenue information until October of each year.
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