Tuesday, February 12, 2008

Still betting on the come 

I've been trying to find this memo referred to in a story titled "State revenue collections fell short in January".

The state collected $86 million, or 5.2 percent, less than finance officials anticipated in their most recent budget forecast.

A memo from Finance Commissioner Tom Hanson says corporate tax revenues were hurt because the state paid out more than expected in corporate tax refunds in January.

Lawmakers returning to the Capitol on Tuesday are facing a $373 million deficit by the middle of 2009. The state's economist has predicted the shortfall will grow when finance officials update their budget forecast later this month.

Hanson's memo says Minnesota's revenues were still $19.3 million above projections for the current fiscal year. The bottom line will change when budget forecasters add in spending patterns.

Let's understand that this is a 5.2% shortfall of one month of receipts. That is, before we were $105 million ahead of the forecast, now we're only $19 million ahead. Given the odd seasonality that occurs to sales tax receipts when Thanksgiving falls early in November, I'm not convinced there is much in the way of useful knowledge in this report, except to scare people into thinking the Legislature should attach jumper cables to your wallet.

People are trying to force the solution without waiting for the evidence that a budget shortfall is here. Try waiting for the end-of-February budget forecast before you start offering tax bills.

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