State tax collections for the second month in a row increased from a year earlier but slipped slightly under projections already below the record-setting levels set in the last two years.
The Joint Legislative Budget Committee staff reported that General Fund revenue collections totaled $704.9 million in August, a 7.5 percent increase from August 2005, but $3.6 million below the projection included in the current state budget.
Revenue collections in July _ the first month of the current state fiscal year _ also were up over the same month a year earlier but slightly below the projection for 2006, the budget staff noted. “Additional months of data are needed, however, to see if this lower rate of growth is a trend.”
However, previous budget reports indicated that the state’s revenue growth is slowing as the state’s financial picture cools somewhat from the red hot pace it experienced after pulling out of the 2002 recession.
The JLBC staff’s latest monthly revenue report said sales and individual income taxes, the state’s two biggest sources of tax revenue, increased at rates of 5.8 percent and 7.5 percent, respectively, in August.
Citing a slowing real estate market and decreasing energy prices as factors affecting sales tax revenue, the JLBC staff called the sales and individual income tax growth rates good, but lower than those recorded a year earlier.
The Legislature and Governor Napolitano based the current budget on a 7 percent revenue growth forecast.
The budget for the fiscal year that ended June 30 was built on a similar revenue forecast but actual revenue rose by 20 percent _ with a $1.5 billion increase in major tax categories, with business profitability and strength in both real estate and construction.
The strong growth level in the 2005-2006 fiscal year followed a 19 percent increase in state revenue the previous fiscal year.
Combined, the last two years of revenue were the state’s highest two-year growth period in at least 35 years, the JLBC said in a fiscal presentation last month.
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