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Arizona revenues drop in May, thanks to large business refund

After successive months of growth, state revenues fell in May, when collections fell $9.2 million below the budget forecast.

But the culprit doesn’t appear to be a slowing in the economy.

Rather, legislative budget analysts said the Department of Revenue had to make a large one-time corporate income tax refund and there was also a technical delay in getting federal funds.

But while last month’s $644 million in collections didn’t hit the forecast, the fiscal-year-to-date revenues are still 6 percent greater than last year.

So far, the state remains in the black. Through 10 months of the fiscal year, the state has collected roughly $8 billion in revenues and spent $7.7 billion.

Additionally, the year-to-date collections are $600 million more than this time in the previous fiscal year.

In its monthly report, the Joint Legislative Budget Committee said the state made a $24.3 million income tax refund to a company. Because of confidentiality laws, DOR could not provide additional details about the refund.

Also in May, a federal payment to the Arizona Health Care Cost Containment System declined by $60.4 million.

The decline resulted from a timing issue, budget analysts said, as the federal government changed how it pays some of the money. Rather than make a lump-sum payment in a single month for one program, as it has done in the past, the federal government is spreading this year’s payment over several months.

There were mixed results elsewhere.

Sales taxes exceeded the budget forecast, but individual income taxes fell due to smaller than expected tax withholdings. Analysts suspected this decline might reflect a timing issue in the collection of withholding taxes.

Meanwhile, the state lost more than 8,000 jobs last month.

Actually, the private sector added 6,700 jobs, but the government sector shed nearly 15,000.

The government typically sheds jobs at this time of the year, but this year’s number is higher than the average within the last decade.

Budget analysts said it might be because the school year ended earlier. If so, next month’s seasonable job loss should reflect a smaller number, they said.

Year over year, however, jobs continued to grow, albeit at a slower pace — by 1.7 percent in May compared to March’s 2 percent and April’s 1.9 percent.

The state’s unemployment rate was unchanged at 8.2 percent.

Meanwhile, the number of pending foreclosures in Maricopa County was up slightly in May when compared to April.

This was the third month that pending foreclosures increased after more than a year of decline.

But there was good news: Median price of single family homes rose — by 3.8 percent from March and by 12 percent from April 2011. Additionally, permitting activity for both single homes and multi-family housing has been on the rise.

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