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COGFA reports revenues up in March, but there’s a big catch

Friday, Apr 3, 2020

* Finke

The General Assembly’s Commission on Government Forecasting said general funds revenues increased by $174 million in March.

“That performance will surprise many given the dire economic straights in which the country and state finds itself,” said COGFA Revenue Director Jim Muschinske in a monthly update. “It does, however, illustrate the inherent lag between economic activity, or lack thereof, and actual performance.”

But Muschinske said people should not be misled.

“The eventual impacts of COVID-19 are unavoidable and will quickly manifest in the coming weeks/months,” he said.

* From COGFA’s report

Similar delays occur after a change in tax rates or policy—usually at least a month from date of implementation. This “receipts in the pipeline” varies by revenue source, but the eventual impacts of COVID-19 are unavoidable and will quickly manifest in the coming weeks/months.

* This will help cushion the blow a tiny bit, but the news isn’t all good

Despite the expected abrupt changes ahead, through March, gross personal income taxes are ahead of last year by $864 million, or $765 million net. Gross sales taxes are up $204 million, or $249 million net, while gross corporate income taxes are up $105 million, or $104 million net. The performance of the remaining revenue sources have been mixed, but have experienced a combined $112 million decline.

* More

Overall transfers fell $64 million for the month. A $6 million gain from miscellaneous transfers was more than offset by a decline of $40 million in lottery transfers, and a $30 million drop from riverboat transfers. In fact, due to the Gaming Board’s action to temporarily close casino operations, no transfers were made this March.

* And

In addition to underlying disruptions to the economy related to the virus, a few corresponding policy decisions will interrupt some well-established revenue patterns. With the State following the federal government’s lead related to pushing back the “tax day” filing period to July 15 , a great deal of variance will be injected into the timing of “final payments”. It is unclear at this time how the extension of the due date will change taxpayer filing behavior, but to the extent it does, it would act to suppress final FY 2020 income tax revenues in April, while moving corresponding receipts into early FY 2021. Further complicating the picture is that simultaneous to this aforementioned timing issue, tax revenues will likely begin to reflect job losses/income losses/and business profits related to the economic shut down.

* Conclusion

The one revenue area that is expected to see some upward pressure from this economic upheaval is federal source revenues. An apparent retroactive increased federal matching rate, along with some lump sum federal assistance, will serve to mitigate revenue losses in economic areas. However, at this time, it is unclear exactly when, into what funds, and what attached federal “strings”, will mean for the state’s bottom line.

At this stage of the battle with COVID-19, the greatest State concern is with saving lives, and doing what is necessary to mitigate its impact. Once the tide turns, and economic engines can again be fired up, it is hoped that the previous trajectory can be re- established. Unfortunately, at this time, it’s unclear when that may be, to what extent permanent damage has been done, and what form a recovery from this pandemic will look lik

The federal Medicaid match has been increased from 50.14 percent to 56.34 percent.

- Posted by Rich Miller        

  1. - Oswego Willy - Friday, Apr 3, 20 @ 10:53 am:

    Sobering thoughts to what’s ahead, let alone what is sitting right in front of us.

    When the revenues show that actual cratering to what we’re in now, the budgetary issues and revenues and federal help will also need to be looked at with the hard real numbers to assess how damaging this new budget will be.

    Still, sobering.

  2. - Gordon Willis - Friday, Apr 3, 20 @ 2:11 pm:

    My concern is the impact on the “Fair Tax” proposal in November.

  3. - Oswego Willy - Friday, Apr 3, 20 @ 2:15 pm:

    === My concern is the impact on the “Fair Tax” proposal in November.===

    In what way?

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