The final report on tax revenues for Idaho’s general fund show the state collected $16.2 million less than expected in February. That’s the biggest gap during the past three months, when the state lowered its expectations for revenues from the income tax, sales tax, and several other taxes. The shortfall for tax revenues is now $41.6 million since December, and adds to the importance of revenue numbers from April, the state’s biggest tax collection month. If revenues stay low, the governor could call a special legislative session to find additional revenues or make more reductions in state spending.
State economist Mike Ferguson wrote in a report on tax revenues that the areas for concern are personal and corporate income taxes, which are down almost $50 million during the last three months of reported tax collections. Taxes on sales, products like alcohol and tobacco, and other taxes have been above Ferguson’s expectations. As in past months, tax refunds to people and businesses were millions higher than predicted. Combined, the refunds for individual and corporate income taxes, which is money the state pays back in over-collected taxes, total $12.3 million, which is most of the $16.2 million shortfall.
“Once again, refunds were the problem,” Ferguson wrote in his report. “Hopefully this excess will dissipate later in the income tax processing season and before the end of FY 2010 on June 30th.”
Ferguson and Gov. Butch Otter have said that April will be the make-or-break month for the state. Idaho is expecting to take in $373.5 million in April, largely due to income tax filings being due on April 15th. That’s more than $100 million higher than any other month. “April is our big month,” Otter said at a news conference earlier this week. He said he’s seen surprises that have been both positive and negative during his tenure as governor. Lawmakers set a budget for the current fiscal year that is $69 million less than Ferguson's projections, so there's still a cushion in case revenues stay below expectations. The Legislature also gave the governor a contingency plan that would allow him to draw up to $107 million from next year's budget to ensure that the current budget is balanced.
Final data for April tax revenues should be available from Ferguson in two months, though preliminary numbers will surface earlier. Read Ferguson's monthly outlooks on Idaho tax revenues here.
