State revenue collections still ahead for fiscal year

By Bobby Harrison/NEMS Daily Journal

JACKSON – While the state missed the revenue estimate for the month of May, it is still on target to exceed the projection for the fiscal year.
With one month left in the fiscal year, the state is $91.1 million above the official estimate, which was used during the 2010 legislative session to build the budget for the current fiscal year.
The revenue growth is welcomed news on the heels of two consecutive years where the state collected less in revenue than it did the previous year.
The unprecedented drop in revenue collections has resulted in several rounds of cuts to state agencies and to education, resulting in layoffs and furloughs.
The state garners the bulk of its revenue from taxes on retail items and on income, and to a much lesser extent on gambling, tobacco, and liquor and beer taxes.
If the state was collecting less than the estimate used to build the budget, additional cuts would have to be made or reserve funds would have to be tapped to offset the loss of revenue.
Collections in May were $2.6 million or 0.7 percent below the estimate. This comes after the month of April, which was $41.3 million above the estimate.
Gov. Haley Barbour said of the dip in May collections, “While this is a small shortfall, it is consistent with a slowdown in economic growth that is being seen around the country.”
The primary reason May collections were below the estimate is that individual income tax collections were $11.2 million or 8.1 percent below the estimate and gaming collections were $3.3 million or 22.5 percent below the estimate.
According to an analysis published by the state Joint Legislative Budget Committee, April’s $41.3 million in collections might have been “partially attributed to the early processing of returns.” The estimate, done by the state’s financial experts, might have been based on those income tax returns being processed by the Department of Revenue in May.
Plus, flooding has closed casinos on the Mississippi River, impacting gambling collections, the analysis concluded.
On the other hand, sales tax collections, generally viewed as a leading economic indicator, were $4.6 million or 3.3 percent above the estimate while corporate collections were a whopping 34.9 percent or $4.9 million above the estimate.
Contact Bobby Harrison at (601) 353-3119 or bobby.harrison@journalinc.com.