Times Reports State Likely to Fall Short of Annual Revenue Target
From the Northwest Indiana Times:
May tax revenue exceeded the state's reduced expectations, but Indiana likely still will fall short of its annual revenue target when the 2014 budget year ends June 30.
Last month, Indiana collected $1 billion. That's $11.5 million, or 1.2 percent, more than predicted by the revised revenue forecast.
At the same time, the May 2014 total was $200,000 less than May 2013 state tax revenue. While that's an improvement compared to April's year-over-year drop of $142 million, or 7.4 percent, it's still unexpected given the state's seemingly improving economy and job market.
Individual income tax revenue remains the unexplained weak link in the state's revenue picture.
Despite Indiana's unemployment rate dropping 2.3 percent since April 2013, income tax revenue is down $106.2 million, or 2.4 percent, compared to last year.
The $287 million May income tax revenue was $22 million, or 7.1 percent, less than forecast. Through 11 months of the state's budget year, income tax revenue is $143.1 million, or 3.2 percent, below expectations.
The income tax deficit last month was overcome by larger-than-expected sales and corporate income tax revenues.
May sales tax revenue totaled $592.8 million. That's $21.9 million, or 3.8 percent, above expectations. The $35.4 million May corporate income tax revenue beat expectations by $11 million.
Revenue from taxes on bets placed at riverboat casinos continued a year-over-year decline, coming in last month $5.7 million, or 11 percent, less than May 2013. Overall, riverboat wagering revenue is down 20 percent compared to last year.
Indiana must overcome a $50 million, or 0.4 percent, shortfall in June to end its budget year at its revenue target.
However, the state is not likely to make up the $94.9 million shortfall compared to 2013 total revenue, meaning Indiana probably will suffer its first year-over-year revenue decline since the Great Recession.
That drop largely can be attributed to the 2013 decision by Hoosier lawmakers to immediately eliminate the state's inheritance tax and cut the corporate income tax rate by 0.5 percent, reducing state revenue by about $160 million a year.