State tax revenues drop and more borrowing is necessary

State revenue fell below expectations in March by 9 percent, forcing officials to borrow $31 million so agencies will get their budgeted allowments.

“We’ve been forced to do this several times this fiscal year to avoid deeper cuts to agencies and keep government operating,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger. “We will be looking to April collections and other upcoming months to make up the difference and reconcile the borrowed funds as we are statutorily and constitutionally required to do.”

In February, Doerflinger told the Board of Equalization that he had to borrow from the Rainy Day Fund in order to make monthly agency allotments.

“The fact we have had to borrow from these funds shows just how serious the state’s revenue problem is,” Doerflinger said.

While total GRF collections are currently within 5 percent of the estimate and further agency reductions are not required, borrowing from other funds to make monthly agency allocations has been needed because of cash flow issues.

“If the fourth quarter declines more than expected, agencies should be prepared for deeper cuts,” Doerflinger said.

With March’s collections, the amount borrowed this year to make agency allocations will increase from about $296 million to about $327 million. About $240.7 million has already been borrowed from the Constitutional Reserve Fund.

The amount borrowed from other funds will rise from about $55 million to $86 million. As state law requires, these funds will be paid back when the FY 17 general revenue has been reconciled and before transfers are made to the FY 18 Cash Flow Reserve Fund at the end of the fiscal year.  Major tax categories in March contributed the following amounts to the general fund:

  • Total income tax collections of $125.8 million were $20.7 million, or 14.1 percent, below the estimate and $26.6 million, or 17.4 percent, below the prior year.
  • Corporate income tax collections were entirely consumed by refunds and contributed nothing to the General Revenue Fund for the sixth consecutive month. For the same month last year, $44 million was deposited into the GRF.
  • Sales tax collections of $146.1 million were $9.1 million, or 5.9 percent, below the estimate and $8.3 million, or 5.4 percent, below the prior year.
  • Gross production tax collections of $20.1 million were $10.4 million, above the estimate and $13.4 million, above the prior year.
  • Natural gas collections of $17.8 million were $8.5 million, or 91.9 percent, above the estimate and $11.7 million, above the prior year.
  • Oil taxes of $2.3 million were $1.9 million, above the estimate and $1.7 million, above the prior year.
  • Motor vehicle tax collections of $18.3 million were $1.9 million, or 11.3 percent, above the estimate and $757,000, or 4.3 percent, above the prior year.
  • Other revenue collections of $41.8 million were $17.3 million below the estimate and $21.5 million below the prior year.