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October 22, 2007
State Revenues Continue To Soften
On October 19, the Department of Finance released its monthly finance bulletin regarding state General Fund revenues and the state’s economic outlook. While there is continuing job growth, state revenues are below the estimate that was made at the time the budget was signed. The current state revenues are below estimates for personal income taxes, sales and use taxes, corporation taxes, and insurance taxes. These are the four most significant general fund revenue sources.
While personal income tax is beginning to stabilize, sales and corporation taxes continue to be soft. For the first three months of this fiscal year revenues are approximately 3.4% below estimate. If this revenue decline continues for the full fiscal year, state general fund revenues would be approx $3.4 billion below estimates. I, however, continue to believe there will be unanticipated capital gains and stock option revenues that will be received in the spring. The stability of the personal income tax may be an indicator that such stock options and capital gains revenue is a possibility.
It is too early to determine what the final estimates will be.
Please contact me if you have any questions at 916.441.3300 or dwalrath@m-w-h.com.
~Dave Walrath
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