November 16, 2009

Analysis: October tax receipts down 2.3 percent

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Comptroller Peter Franchot has released his monthly revenue report for October, and though it’s not pretty (overall receipts were $892.8 million, a drop of 2.3% from last October), the numbers do indicate that the state now has a better read on where the economy is headed and how it will affect the state budget.

For the first several months of the recession, the state repeatedly had to draw down its expectations for what it would get. Of course very few people foresaw the speed at which the bottom would drop out of the economy, but the unpredictability gave budget planners fits as they tried to figure out how much they’d have to cut, and when. Revenues are down 6.6 percent for the year.

Perhaps expectations have been tamped down enough at this point. In his revenue report to House Speaker Michael Busch, Senate President Mike Miller, and Gov. Martin O’Malley, Franchot wrote that “performance is generally in line with expectations, which remain very low.”

Here are a few highlights:

– It wasn’t good news for the personal income tax. Withholding was down by more than 3 percent for the second straight month.

– Sales tax receipts were down 5.4 percent, and have declined by 7.5 percent this year. The report notes that gross receipts fell to their lowest level since March.

– People are gambling. Lottery sales are up by 4.7 percent. Mega Millions “led the sales charge.”