PHOENIX — State tax collections continue to shrink even as more people continue to move here.
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But it shows that the state’s economy remains in the doldrums: This is the 10th month in a row that tax revenues actually lagged the same period a prior year.
Much of that difference — more than $36.6 million — is in lower sales tax revenues. That is a direct reflection of how much consumers are spending on taxable items, pretty much everything other than groceries and prescriptions.
It also is nearly $60.2 million below what lawmakers projected when they adopted the new state budget.
But individual income taxes also are $2.7 million lower than July 2007. And part of that is due to smaller amounts being remitted to the government in withholding from worker paychecks, a key indicator of total earnings. The report does not provide a reason. But the state’s jobless rate, which was 3.7 percent in July 2007, hit 5.1 percent last month.
Corporate income tax collections were $23.3 million, $10.5 million less than last year. These, however, are considered more volatile and less predictable than the other two.
The new report also warns of fiscal troubles to come.
When lawmakers approved the new state budget in June, they assumed that the state would collect $9.98 billion in taxes in the new fiscal year which began July 1. That was considered a conservative estimate, based on what lawmakers and the governor thought would be a 1.9 percent increase in revenues.
But the tax collection numbers for last fiscal year, while still being finalized, ended up much lower than anticipated. And what that means, the report cautions, is it would take a 6.1 percent increase in year-over-year revenues to hit that $9.98 billion figure for this year.
“Given the 2008 (fiscal year) experience and current economic conditions, 6.1 percent growth seems highly unlikely,” the report warns.
Aides to Gov. Janet Napolitano did not immediately respond to requests for a response to the latest revenue figures.





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