Apr 24 2009
An income shortfall
There are a few days left in April, but at the moment the personal income tax received by the state is a little over $5 billion. That is less than half of what the Department of Finance predicted would come in this month.
April is the biggest tax reciept month because personal income taxes are due on April 15th. Normally there are large incomes on April 15th, 16th and 17th, and the revenues drop off sharply from there. At this point in time, there is less than half the projected revenues coming into the state.
Either a ton of people aren’t paying taxes (to the tune of $7 billion dollars) or the Department of Finance (again) flubbed their projections. The projections are important because they are the number that the Legislature has to use when balancing the budget. When income is less than the projected revenues, there becomes a larger gap between cash and spending. When the income exceeds revenue estimates, the gap between cash and spending narrows, or is closed completely.
At this point the state is already $8 billion in the hole. To know that revenues are down by almost 50% means that, if there were no more filings, the state would be $15 billion in the hole (the sum of the $8 billion and the $7 billion that the state is short by with income taxes). This number will be less than $15 billion because the revised internal estimates have the state bringing in approximately $3 billion more dollars in personal income taxes by the end of the month.
It is possible the state brings in $3 billion in a few days, but I wouldn’t count on it.
