Saturday, April 06, 2002

State receipts take plunge


Revenue falls 11.6% compared to previous March

By Mark R. Chellgren
The Associated Press

        FRANKFORT — Revenue receipts plunged in March, offering a warning to legislators trying to put together a spending plan for the coming two years.

        Figures released Friday by the state budget office showed receipts fell 11.6 percent in March compared with the same month a year ago. Through the first three quarters of the fiscal year, receipts are 0.8 percent less than the previous year.

        Receipts must grow by 0.9 percent by the time the fiscal year ends June 30 to meet budget requirements. That means receipts must grow by 3.9 percent in the last three months of the fiscal year to meet projections. By comparison, receipts fell 5.5 percent in the third quarter.

        Budget director James Ramsey said he is not yet ready to call together the group of economists who provide the state's official revenue forecasts because of uncertainty about receipts from income tax.

        The Revenue Cabinet has paid out about 800,000 individual tax refunds so far this year, or about 65,000 more than the same time a year ago. That has depressed the amount of money the state gets to keep.

        The state expects to pay about 1.2 million refunds this year.

        At the same time, the average size of the refund — $273 — is about $20 more than usual.

        On the other side, the average size of individual payments contained in income tax returns — $350 — is up this year by about $36. The state expects to receive 250,000 to 300,000 returns with additional payments and has only received about 50,000 such returns.

        “On the individual income tax, there's still a lot to sort through,” Mr. Ramsey said.

        But other parts of the state revenue picture are also cloudy. Sales and use tax, the second-largest source of money, also declined in March. Corporate income taxes and property taxes also fell.

        Only the coal severance tax, which is a relatively small piece of the revenue mix, grew in March.

        Gov. Paul Patton's administration has already had to slash nearly $500 million from this year's spending plans because of faltering receipts.

        Legislators, who did not get a budget plan put together before their veto recess began Tuesday will now face an even more uncertainty as they try to figure out spending for the two fiscal years that begin July 1.

        “It doesn't sound good,” said Rep. Harry Moberly, D-Richmond, chairman of the House budget committee. “It would probably tend to make us more cautious about how we conclude our discussions and what we might do.”

        Mr. Moberly said the faltering receipts indicate another round of budget cuts could be in the offing this year. “And it does not bode well obviously for what we thought was the beginning of a recovery,” Moberly said.

        Mr. Moberly said the depressed receipts could argue for changes in the tax system, which he said has not kept up with economic growth.

       



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- State receipts take plunge