Concerns about a slowing Mainland economy prompted the state Council on Revenues yesterday to leave its forecast for state revenues unchanged at 6 percent growth for this fiscal year despite signs of decent growth.
The state collected $260 million in tax revenue last month, a $32.7 million increase, or 14.4 percent, over the previous February, the state Tax Department said.
Total tax revenues collected so far in the fiscal year that began July 1 is $2.1 billion, an increase of $154 million, or 7.8 percent, over the same period last fiscal year.
The Council on Revenues forecast of 6 percent growth means the state would take in about $180 million more this year than last year.
Mike Sklarz, chairman of the Council on Revenues, attributed the state’s economic growth to a combination of good real estate activity, an improving job market, higher consumer confidence and "decent levels" of tourism.
He said he believes people are purchasing things they put off buying in the 1990s, such as cars and homes.
The council didn’t raise its growth projection because of concerns with the Mainland economy, Sklarz said.
General excise tax collections, the state’s largest revenue source and typically an indicator of the state’s economic health, grew $18 million over February last year to nearly $150 million. That boosted general excise tax collections collected so far for this fiscal year by $104.7 million, or 10.4 percent ahead of the previous year’s pace.
The "all others" category also jumped by $11 million over the previous year. Department officials attributed most of the increase to a $5.6 million rise in tax revenue from public service companies and a $4.1 million boost in estate tax revenue.
Corporate income tax revenue dropped $4 million because of a $4.1 million decline in estimated taxes which fluctuate monthly.
The Senate on Thursday voted 14-11 to approve a bill that would eliminate the last two of three phases of the income tax cuts promised to taxpayers in 1998. The measure is estimated to save the state more than $200 million over two years, and is promoted as a way to pay for raises for teachers and other costs.
Sklarz said it was hard to quantify the economic impact that income tax cuts enacted in 1998 may have had. But, he said, "I think both financially and psychologically they have great benefits to us, so I’d hate to see us take the tax cuts away."
