Serving perhaps as a preview for this Thursday’s quarterly revenue forecast, state economist Arun Raha released the May tax collections report today. And yes, they were down…again.
Here is a link to the pdf of the actual report.
But if you don’t want to read all 10 pages here are the nut graphs…
The rate of national economic growth has slowed considerably. The weakness evident in first quarter data appears to have extended into the second quarter as well. However, headwinds are likely to recede in the second half of the year, and growth should pick up then.
The Washington economic recovery has slowed since March after fairly strong growth at the end of 2010 and early 2011.
Major General Fund-State (GF-S) revenue collections for the May 11 – June 10, 2011 collection period came in $69.7 million (4.0%) below the March forecast due to a sharp slowdown in economic activity in April. Cumulatively, however, collections since March are still $93.1 million above the forecast due to last month’s receipts from the amnesty program for past due taxes.
Generally, Raha appears to blame external factors – war, earthquakes, tsunamis.
“Geopolitical developments in the Middle East and North Africa boosted oil and gasoline prices, eroding consumers’ purchasing power and confidence.” he wrote. “The Japanese earthquake and tsunami continues to
pose a threat to the state’s recovery. Japan is the state’s third largest export market.”
But Raha thinks there is a silver lining to this latest economic black cloud.
“Eventually reconstruction activity will be a plus for our state’s economy but in the near
term the devastation has disrupted supply chains and reduced demand for Washington
Remember, the forecast is done quarterly and is a projection of what is to come. The monthly collections report covers the actual tax collections. That is, it reports money in hand and is one measure of how accurate the previous quarterly forecast is. In Dickensian terms, the monthly collections are the Ghost of Christmas present while the quarterly forecast is the Ghost of Christmas yet to come. (And no, I am not suggesting that Raha is Scrooge. Actually he more-accurately cast as Jacob Marley).
As has been the case for much of the Great Recession, the monthly collections have been below forecast and have served as a predictor of where the next forecast might be heading. Distressingly, that has nearly always been down.