The nearly double-digit cash surplus the state had at the end of January completed evaporated in February, but Batt administration analysts said on Monday there was no reason for policy makers to panic.
The Division of Financial Management reported that flagging individual income and corporate tax collections more than wiped out the $9.8 million cash cushion on Jan. 31 and created a $1.1 million cash shortfall at the end of February.
But, administration chief economist Michael Ferguson said, “an examination of the factors that caused this weakness suggests it is primarily a matter of timing, and it does not represent a fundamental change in idaho’s economic or revenue outlook.”
In fact, the poor revenue performance in February was almost a carbon copy of the drastic - but temporary - reversal of fiscal fortunes the state experienced in January 1997. In that one month, a $4.1 million cash surplus turned into nearly an $8 million shortfall, prompting lawmakers stiff state workers on a modest 2 percent pay raise.
But by the end of the financial year on June 30, the state had rolled up a $13.3 million surplus that was rolled into this year’s budget.
The downturn in tax February collections was largely because of higher-than-expected personal income tax refund claim. Analysts said there was a significant increase in the use of electronic tax filing during the month.
Refunds were also the culprit in the underperformance of the corporate tax. Officials said $2.3 million, about half the amount collections fell short of the monthly target, was due to a one-time refund discovered during an audit.
Economists did take heart in better than expected paycheck withholding, a key indicator of the economy’s underlying job strength.
They were also optimistic about the sales tax, a reflection of consumer confidence. Collections were $1.3 million higher than expected last month after a disappointing holiday shopping season.
Through eight months of the budget year, revenues were running 6.1 percent ahead of a year ago. Gov. Phil Batt built his budget on 6.5 percent revenue growth.