State tax revenue could be $90M less than projectedby The Associated Press on Sep. 08, 2008, under Edge, Local, Special
Sales tax collections dropped $90 million below projections in July – the biggest monthly decline in the state’s economic doldrums, according to the latest report from the Joint Legislative Budget Committee.
In order to rebound, the state would have to see a growth rate of 6.1 percent to make the current year’s $9.9 billion budget balance by the time it closes out on June 30, according to the report.
Lawmakers and analysts say such a growth rate is highly unlikely, in part because the budget was built on the assumption that growth over the next year will be only 1.9 percent.
Senate Appropriations Chairman Bob Burns, R-Peoria, said the report only compounds the problems he sees for the coming year’s budget. Burns said he thinks lawmakers can find a way to keep the current budget in balance. He sees little hope for the 2010 budget.
“Where’s the prediction that we’re going to get better?” he asked. “So far, we don’t see anything. We haven’t hit bottom yet.”
A downturn in the housing market and higher gas prices have driven the state’s economic woes.
Retail sales-tax collections fell 10.4 percent. The legislative report suggested the drop could be a result of higher gas prices.
The drop in sales-tax revenue is hitting the state’s bottom line the hardest. Sales tax collections fell 9.3 percent from July 2007, and were $60.2 million lower than budget analysts had forecast.
Other primary sources of tax revenue also were below forecast. Income-tax collections were down 1 percent from July 2007, and down $19 million from the level that was forecast. Corporate income taxes slid 31.1 percent, and $10.3 million less than what was forecast.
Some are suggesting a special lame duck session of the Legislature to tackle a projected budget shortfall and make the necessary budget cuts to ensure the 2009 budget remains balanced.
Two key moderate Republicans who worked with Democratic Gov. Janet Napolitano on the last budget fix lost their races in Tuesday’s primary, and may be replaced by budget hard-liners.
Burns said he doesn’t see a special session happening, even though it makes sense.
“We should be doing something to fix this problem now, instead of waiting,” he said.