Budget fix might not be enough as state tax receipts decline this year

By Howard Fischer
Capitol Media Services
Published/Last Modified on Thursday, May 1, 2008 3:06 PM MDT


 PHOENIX — A fix in the current state budget approved just this past month may not be enough.


 New figures Wednesday show sales tax collections for March were less than $350 million. That is about $3.5 million less than the same figure a year earlier.

 The state’s net individual income tax revenues — payments minus refunds — were even more disappointing: Arizona got just $62 million; in 2007 income taxes collections topped $105 million.

 But legislative budget analysts said part of that may be due simply to the Department of Revenue processing refunds faster this year than the year before.

 And corporate income tax collections also are below a year earlier.

 But the real benchmark is that the staff of the Joint Legislative Budget Committee says what was actually collected in March is below the latest revised revenue forecast — the forecast which lawmakers used when the plugged a $1.21 billion deficit last month.

 At this point, though, it remains unclear whether further legislative action is needed.

 As of March 31, tax collections were about $72 million below that revised forecast. But the budget fix adopted last month included what might be called an extra $150 million “fudge factor,’’ making sufficient provisions to deal with the deficit if it actually turns out the gap between revenues and expenses on June 30, when the budget year ends, is $1.36 billion. That cushion, however, may not be enough if tax collections remain disappointing for the remaining three months of the budget year.

 The easiest way to make up the difference would be to take some more money out of the state’s nearly $700 million “rainy day’’ fund.

 Lawmakers already plan to tap $487 million from that account. But withdrawing more would leave legislators with fewer options to balance next year’s budget where a deficit even larger than the one this year is predicted.

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