Tax refunds put dent in February revenue

BOISE – February’s tax collection left the state $23.4 million shy of projected tax targets, but Gov. Dirk Kempthorne’s chief economist said the fiscal year was still on track to end with a $117 million surplus.

The shortage was likely because many of Idaho’s income taxpayers were filing their tax returns electronically and getting their refunds earlier than they have in previous years, Chief Economist Mike Ferguson said.

“The primary cause of the flux is in individual income tax refunds and that’s new technology. There’s no reason to think it’s anything other than timing,” Ferguson said. “That should straighten itself out by the end of the fiscal year.”

Individual income tax receipts came in at $614.2 million in February, according to preliminary reports — $26.3 million less than expected. Corporate income tax receipts also came in low, about $2 million less than planned.

But sales tax revenue was $4.8 million higher than predicted, tempering the overall shortfall.

Still, Ferguson said, there was no reason to think the state would do worse than expected at the end of the fiscal year in June.

“In the past several years, we’ve seen dramatic accelerations in the timing or refund payments. There’s improved software from the tax commission, improved software in the hands of taxpayers. People can file early and get a refund, and that’s what we’re witnessing,” Ferguson said. “As long as we come out on target the next three months, we should come out ahead.”

January’s general fund revenue figures were stronger, with the state about $26 million ahead of predictions. And just last month the governor boosted his own prediction for the end of the year surplus to $143 million.

At the time, Kempthorne said evidence was mounting that Idaho is on its way to recovering from a post-Sept. 11 slump that forced layoffs and caused state lawmakers to slash the state budget and temporarily boost Idaho’s sales tax by a full cent in 2003.