State Revenue Lower than Expected for 2nd Straight Month

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Minnesota Management and Budget (MMB) announced revenue collections for August are $26 million less than projected. For the FY 2014-2015 biennium (which began July 1), collections are running $46 million behind what was predicted by the February 2013 Forecast.

The story behind the big three taxes, income, sales, and corporate, was mixed. Income tax collections were down $3 million and corporate tax collections were down about $15 million while sales tax collections were up by $30.6 million for August. MMB said that the some of the revenue drop might be attributable to a Labor Day lag in the State’s accounting system.

The amount of the revenue collections here is not the story. In the grand scheme of the $38.3 billion State general fund budget, a $46 million variance is quite small. Rather, we should be wondering if the two months in a row of revenue declines will continue and is this a signal of something happening in the economy. A clearer picture will emerge when MMB publishes its Quarterly Revenue and Economic Update on October 10th and when the Economic Forecast is released at the end of November.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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