Overall State Tax Revenue Dips Slightly In January

State general tax collections slipped slightly in January as a surge in personal income tax receipts failed to offset declines in corporate and sales tax revenues.

But Batt administration chief economist Michael Ferguson told legislative budget writers on Wednesday that it appears the slippage, especially in the key category of sales tax, will not be enough to erode all of an unexpected $20 million jump in December corporate tax collections.

“Because of the corporate income tax, we’re probably going to see more revenue this year than is in our projection,” Ferguson told the Joint Finance-Appropriations Committee.

He declined to provide a number because of the economic uncertainty that is developing in the state with some major layoffs, slowing construction activity and inexplicable sluggishness in retail sales.

But he indicated later that there was a likelihood the surplus, created by what is believed to be a huge December tax payment by Micron Technologies Inc., could total around $10 million by the end of the fiscal year on June 30.

That would give the budget committee, which has already set about 90 percent of the 1996 state expenditures, about $14 million in uncommitted cash to handle special projects Republican Gov. Phil Batt excluded from his tightfisted spending blueprint.

But the excess cash, Ferguson cautioned, is “probably not something we can count on on an ongoing basis.”

In fact, he suggested that the administration’s January forecast of 7.5 percent revenue growth for the next budget year beginning July 1 may be optimistic.

“The warning signs are merging,” he said. “I don’t think that it would be prudent to increase your expectations of revenue. The future is certainly more uncertain than when we did our forecast.”

Through January, general tax revenues were just under $20 million more than the administration projected, a decline of about $1 million from the total at the end of December.

Total collections of $774 million were 13 percent higher than a year ago, but without that one-time jump in corporate tax receipts, the increase would only be about 10 percent.

While personal income taxes exceeded January collection estimates by $3.9 million, that was just enough to offset the decline in sales tax receipts, which reflected what was being characterized as a disappointing Christmas shopping season.