Budget Watch - April's General Revenue Collections Come in $878 Million Below Estimate for the Month
Net General Revenue (GR) collections for the month of April came in $878.1 million (29.4 percent) below estimate. This news comes from new Monthly Revenue Report just released by the Office of Economic and Demographic Research.
This is the first month of data to show a significant decrease in revenues due to the impact of COVID-19 on the state’s economy. April GR collections generally reflect March sales tax activity, so the decline in May collections (reflecting April sales) will be much larger.
The sales tax, by far the state’s largest revenue producer, saw April collections fall $598.1 million ($24.1 percent) below estimate. This decline was largely due to losses in the tourism and hospitality sectors, as well as automobile sales. Tourist and recreation-related sales taxes were 42.7 percent below estimates.
Coming into April, GR collections were running $202.4 million above the estimate made in January 2020. This is the revenue estimate on which the FY2020-21 state budget was built. The decline in April collections mean that GR is $676.7 million below estimate year-to-date.
While these are startling (but expected) revenue numbers, they are tempered somewhat by the fact that a significant portion of the decline is due to state orders delaying payment of some taxes or fees until June or later. These revenue sources (corporate income tax, corporate filing fees, and highway safety fees) were $323.1 million below estimate, accounting for 36.8 percent of the decline. Most of those losses are expected to be recouped in June, the last month of the current fiscal year.
Besides those three sources and the sales tax, only a couple of other revenue sources had significant dollar losses. Insurance premium taxes were $9.9 million (5.2 percent) below estimate, and GR service charges3 were $15.7 million (25.2 percent) below estimates (see table). Two sources that were significantly impacted by closures or limitations—pari-mutuels taxes and court fees—had large percentage losses but are relatively minor GR sources. Pari-mutuel taxes nearly dried up all together, with actual collections of $300,000 compared to the estimate of $2.5 million.
Several GR sources actually beat the estimates in April. Alcoholic beverage and tobacco taxes, documentary stamp taxes,4 and intangibles taxes all appeared to not yet be impacted by the COVID-19 economy. Collections for these taxes came in $30.0 million above estimates. The state economists believe the impact is delayed and expect some of these sources to decline in the coming months.