On Monday, October 3, the Legislative Services Agency (LSA) released the final revenue figures for FY 2011 and the first quarter figures for FY 2012. While FY 2011 came in above the estimate set by the Revenue Estimating Conference (REC), FY 2012 is below the current REC estimate.
For FY 2011 (which ended June 30, 2011), revenue increased by $320 million (5.8 percent) compared to FY 2010. Adjusting for transfers, this is $42.7 million above the REC estimate. That amount will roll over into the beginning balance of the FY 2012 general fund budget.
Through the first quarter of FY 2012, revenue was down $43.5 million (3.0 percent) compared to FY 2011. However, this is all due to $59.7 million of cigarette and tobacco tax being deposited into the Health Care Trust Fund. Factoring in this transfer, revenue grew by $16.2 million (1.1 percent) compared to FY 2012. Unfortunately, this is dramatically below the REC estimate of 5.3 percent growth.
Despite revenue being below the current REC estimate, most major facets of general fund revenue is up compared to FY 2011. Personal income tax receipts were up 4.4 percent (right at the REC estimate), sales and use tax is up 2.2 percent (compared to an estimate of 3.7 percent), corporate income tax is up 6.9 percent (compared to 9.5 percent) and other receipts were up 8.2 percent (compared to 10.5 percent).
The REC will meet again on October 14 to adjust the estimates for FY 2012. Due to FY 2011 coming in $42.7 million above the estimate, there will be a cushion to absorb some of the expected decrease. In addition, the FY 2012 budget has a nearly $300 million ending balance thanks to House Republicans for refusing to allow it to be spent on ongoing appropriations.
These facts are not reason for panic but definitely a reason to be concerned. House Republicans will continue to use and argue for conservative revenue estimates in the future and urge the REC to decrease the estimate slightly in order to better align it with actual revenue growth.