Idaho took in fewer tax dollars than expected for the third straight month in November.
The latest report from the Idaho Department of Financial Management comes days before Gov. Butch Otter’s budget address on January 11. These new numbers will likely impact what spending cuts Otter calls for in his presentation to the Legislature.
The state sales tax dropped off greater than Idaho economists predicted in November, which led to the $1.5 million total revenue shortfall. October and September both had shortages topping $4 million. Personal income tax figures were also below expectations for November, but corporate income taxes were higher for the month.
Idaho’s general fund revenue is still slightly over expectations for the year, but the recent downward trend shows that the state economy is moving more slowly than forecasters predicted. DFM will put out revised tax revenue predictions this month.
The DFM revenue report also included economic predictions from chief economist Mike Ferguson that matched his recent measured optimism about the Idaho and U.S economies. Ferguson predicts the U.S. economy will recover slowly, due to high unemployment. He said unemployment will also tame inflation. Ferguson expects government stimulus funding to decrease and that this year Congress only has money for a “symbolic attempt to aid the jobless.”
On the international level, Ferguson predicts that Japan and Europe will recover more slowly than the U.S., and says the dollar should strengthen but remains on a downward path.
Ferguson said Americans still need to worry about a “hard w” recession, also called a double dip recession. That’s when economic indicators make a “w” shape as small economic gains reverse, plunging the nation back into a recession. Ferguson said there’s a 20% chance for a return to a recession, and that any number of factors, including higher oil prices, drastically reduced consumer spending, or large bank failures, could tip the scales to a “hard w.”
Read all of the DFM’s two-page Outlook here (pdf).