Tax Receipts Rise, Skewed by Cash for Clunkers
Florida tax receipts topped expectations by $32.6 million last month – the fifth straight month of better-than-forecast cash flow, state economists reported Tuesday.
But there’s a catch, warned Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research.
“Sales tax is up, but it’s helped by the cash-for-clunkers program, which is now ended,” Baker said. “Corporate income tax went up, but that’s been helped by a big payment. And refunds were up in August. So that all helped the revenue numbers.”
“State forecasters last month shrunk their revenue projections for 2010-11 by $147.1 million because of the slow economy, a move considered modest given that a year earlier a $1.1 billion reduction was needed as the recession deepened.
But that August forecast showed tax collections were relatively close to their targeted levels -- effectively erasing concern that a special legislative session would be needed in coming months to cut the state’s $66.5 billion budget – which is already $6 billion less than it was two years ago.
In the latest findings, sales tax collections -- the state’s single largest tax source -- were $1.3 billion for August. That’s $100 million below what they were a year earlier, before the economy crashed. But Florida's last month of tax collections below expected levels was in March, when lawmakers convened this spring's session.
The federal cash-for-clunkers program, designed to get more fuel-efficient vehicles on the road and spur car sales, helped spike revenue collections last month – but is expected to slow vehicle sales in future months, state economists have said.
The program effectively accelerated sales that otherwise would occur over several months, according to analysts.
But real estate transaction taxes rose slightly above expectations, prodded by Florida’s steady rise in home sales stemming from lower prices and foreclosures.
Baker pointed out that roughly just as many revenue sources came in below expected levels in August as those exceeding their forecasts.
“It’s generally good news,” Baker said. “But we can’t draw too many conclusions from it about the recession or state economy.”