Strong Sales Keep October State Revenues on Track
November 16, 2017
Following on the heels of big state revenue months, October revenues came in just shy of 2017-18 budget projections. Despite slumps in two of the biggest revenue sources (personal income tax and corporation tax), according to the Department of Finance’s October cash flow report, overall revenues in the month of October experienced only a $1 million dollar shortfall, explained by an unexpectedly strong month in retail sales.
Sales tax receipts of $2.37 billion for October were $122 million (5.4 percent) higher than anticipated in the budget. Additionally, receipts in October 2017 exceeded receipts in October 2016 by $11 million. For the fiscal year-to-date, sales tax revenues are $369 million (4.7 percent) above budget estimates.
Both personal income tax receipts and corporation tax receipts lagged behind projections for October. Personal income tax revenues underperformed by $67 million (1.3 percent) while corporation tax revenues underperformed by $87 million (23.8 percent). However, both revenue sources continue to exceed budget projections when looking year-to-date. Personal income tax revenues are up $80 million (0.4 percent) and corporation tax revenues are up $139 million (8.3 percent).
Money transferred to the Mental Health Services Fund (MHSF) in October totaled $94 million which is $1 million lower than expected.
Taken together, along with smaller revenue pools such as insurance taxes and estate taxes, total state revenues for the first four months of the 2017-18 fiscal year are outpacing budget projections by $673 million (2.0 percent).
Revenues aside, DOF reports positive labor market conditions with employers adding on average 21,400 jobs per month. The government sector led for the month of September with 27,000 job gains (25,700 from local governments), followed by trade, transportation, and utilities (13,000). Merchandise exports, building activity, and single-family home sales have also continued to either climb or at least hold steady.