State revenue slide continues
For the sixth straight month, the state took in far less tax revenue than expected, continuing a trend of worrisome shortfalls that has policymakers watching carefully.
According to information released by the state’s Department of Revenue late yesterday afternoon, the state fell about 2.1% short of its projected revenues, pulling in just $3.776 billion despite forecasts predicting nearly $3.9 billion in tax takings.
“December collections decreased in non-withheld income tax, sales and use tax, corporate and business tax, and ‘all other’ tax in comparison to December 2022,” DoR Commissioner Geoffrey Snyder explained.
“These decreases were partially offset by an increase in income tax withholding. The decrease in non-withheld income tax was driven primarily by lower income tax estimated and return payments and an unfavorable increase in income tax refunds,” he added. “The decrease in sales and use tax was mainly due to typical timing factors in collections. The decrease in ‘all other’ tax is mostly attributable to a decrease in estate tax, a category that tends to fluctuate.”
According to DoR the state actually took in about $60 million more in December 2023 than they did in December 2022, but nevertheless, after again falling short of their own predictions, the treasury is about $769 million, or 4.1%, shy of their year-todate benchmarks.
December’s report comes following five previous months of the same bad news. In fact, the state has failed to meet its own estimates on tax revenues for the entirety of fiscal 2024 thus far, a fact not lost on lawmakers.
“I think we’re getting clear signals that we need to think about the fiscal stability of the commonwealth. And we need to chart a very careful course in the months ahead based on those signals. Obviously, we hope that the numbers are going to change and they’re going to get better. But we need to be prepared for the possibility that they won’t,” Republican state Senate Minority Leader Bruce Tarr said.
Senate Ways and Means Chairman Michael Rodrigues, one of the state’s chief budget authors, told the Herald that falling revenue numbers aren’t cause for “panic” yet, but do warrant a “careful and conservative” approach to budget writing.
“There is a cause to be very diligent. The trend will continue through, now, six months, the first half of the fiscal year where revenues are below benchmark,” he said.
DoR says that most of the money the state makes comes in during the second half of the year, and so it’s not unusual to see the first half of the fiscal calendar come in a bit short.
“Revenue collections are uneven and usually weighted toward the second half of the fiscal year. Therefore, it may be premature to use year-to-date results to assess trends for the entire fiscal year,” they said.
However, December tends to be a significant tax month, because corporate and businesses ratepayers are required to file quarterly returns, according to Revenue officials.
“Historically, roughly 9.5% of annual revenue, on average, has been received during December,” they wrote.
Herald reporter Chris Van Buskirk contributed.