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State Revenue Collections Up

Although collections are up, the state expects the final tax refunds to more than offset higher revenue collections.
(Published Jun 24, 2010)

Minnesota Management and Budget Commissioner Tom Hanson on June 10 reported the monthly revenue collections for the state’s general fund to the governor and legislative leaders. For the month, collections exceeded the February forecast by $56 million, or 6.15 percent. Although the figures appear to paint an optimistic picture for the state budget, a footnote in the report actually raises more concerns.

The May revenue collections report only includes income tax withholdings and individual estimate tax payments and does not net out individual income tax refunds and final tax payments for the 2009 tax year. The footnote goes on to indicate that work on the final net collections is ongoing, and it appears that the final tax payments minus refunds will be substantially lower than forecasted and the shortfall could be as large as $150 million.

The Legislature and governor ended the 2010 session by balancing the state’s projected $994 million deficit and also by addressing the uncertainty surrounding governor’s use of unallotment in the wake of the Minnesota Supreme Court decision on the unallotment litigation. However, that forecasted deficit was based on the February state budget forecast and, if the final net collections for the 2009 tax year are below the February forecast, it could result in another round of state budget cuts by the governor through unallotment this fall or by the Legislature when they reconvene next January.

The next state budget forecast will be released in late November or early December and that forecast will reflect recent changes in state revenue collections as well as changes in state expenditures.

The table below reflects the state revenue collections for the month of May.

Table: May 2010 Monthly State General Fund Receipts

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