State tax collections continued their downward slide in October, with revenues for the month coming in more than $140 million below forecast and the state slipping deeper into a sea of red ink.
In the first four months of the fiscal year, the state’s revenue is short $376 million compared to earlier projections. October was the 15th consecutive month revenues declined by double digits over the previous year.
The continuing decline in revenues has forced the state to contract with Bank of America to borrow as much as $700 million to pay its bills.
Last week, legislators reduced the fiscal 2010 deficit by $423 million through a combination of spending cuts and transfers, bringing the estimated shortfall to $1.6 billion. However, if tax collections continue to underperform, that state budget deficit could be revised upward in January, legislative budget analysts said.
In order to avoid revising the budget deficit, revenues can fall by only 2.4 percent in the remaining eight months of the fiscal year. In the first four months, revenues have come in 14.3 percent below expectations.
“Given that revenue began to decline dramatically in the second half of FY2009, we do not anticipate that the double-digit declines will continue past January,” the Joint Legislative Budget Committee wrote in its November monthly update. “At the same time, however, limiting the revenue decline to 2.4 percent seems too optimistic.”