The state’s economists are cautious about the June tax collection report released this morning. But given the tightly balanced state budget, any collections report that is up is good news.
Today’s report shows that actual collections are up $66.5 million higher than expected based on the forecast. That’s 5.5 percent higher than the forecast). Of that, $45 million is so-called Revenue Act which contain the state’s largest taxes.
But the economists say it is too soon to know if this shows that the forecast was too pessimistic.
“Due to the high variability of monthly Revenue Act receipts, it is too soon to tell whether this month’s Revenue Act variance represents a real increase in collections or if it will be at least partially reversed next month,” the monthly collections report states.
The report explains the issue further.
Business activity is not always smooth month-to month, as the timing of large transactions can fall just ahead of or behind the last day of the month. Monthly collections also include late payments, payments resulting from audits, refunds of prior payments, etc., which can vary substantially each month. Because of these factors, it is often the case that a stronger-than-forecasted month of collections is followed by a weaker month.
Areas for worry are the slow growth in employment and the slowing manufacturing sector.
Positive signs are the national and state housing markets.
“The Washington economy continues to grow at a moderate pace,” the report states. “Similar to the national experience, Washington employment growth has slowed down after a strong start at the beginning of the year. Manufacturing is still growing, but at a reduced rate. Aerospace employment is still expanding, but at a slower rate than in 2011. Housing construction, however, is gradually improving thanks mainly to the multifamily segment. ”
Here is a link to pdf of the full report.