Mississippi raked in more revenue than expected last month, marking the first time in 20 months in which the state exceeded revenue projections.
The state collected $52 million more than projected in March, but the projection for the month may have been affected by a change in the due date for corporate tax collections. Corporate tax collections landed 85 percent above projections, padding the total revenue for the month.
“We’re certainly encouraged by the increase in revenue and will have to wait to see if the trend continues,” House Speaker Philip Gunn said in a statement.
Revenue collections in March continue to reflect shortfalls in both sales tax and individual income tax, two subsets that have struggled in recent months.
Corporate tax collections, which include both corporate income tax and corporate franchise tax filings, were much higher than projections for March. Last year, lawmakers passed a law that moved the corporate tax due date from March 15 to April 15. Because of that date change, economists this year were unsure how much to project in corporate collections for March, said Department of Revenue spokeswoman Kathy Waterbury.
Economists projected the state would collect $57.2 million in corporate tax revenues in March, but by the end of the month, the state had collected $106.1 million.
Waterbury said higher-than-expected corporate revenues could mean those collections during the months of April and May could be lower than projected.
“Without any history to base our estimate on when revenue would arrive, the estimate spread for March-May was an unknown,” Waterbury said. “We didn’t know how many would still file (and pay) in March, and how many would move to April.”
Waterbury also said that Department of Revenue employees, who are often strapped during the months of April and May dealing with individual income tax returns, may not be able to sift through all mail promptly, which could impact April and May revenue totals.
March is just the third month in the past 20 in which the state met its revenue projections. The previous months were May 2016 and August 2015.
Tax revenues feed the state’s general fund, which finances state agencies and their daily operations. Lawmakers each legislative session can only dole out funding for agencies based on future revenue projections made by economists.
When revenues run below projections, the governor and Department of Finance and Administration Director Laura Jackson compensate by cutting state agencies’ budgets or transferring reserve fund money to the general fund.
Since the fiscal year began on July 1, 2016, Gov. Phil Bryant has made four mid-year budget cuts to offset lower-than-projected revenue collections.
• March 2017: $20.5 million cut, $39 million transfer from Rainy Day Fund
• February 2017: $43 million cut, $7 million transfer from Rainy Day Fund
• January 2017: $50.9 million cut, $4 million transfer from Rainy Day Fund
• September 2016: $56.8 million cut for “accounting error”
So far this fiscal year, Bryant has pulled $50 million out of the state’s largest reserve, the Rainy Day Fund. That $50 million is the usual statutory cap on what the governor may transfer from the fund, but the Legislature in March authorized him to draw up to $50 million more for fiscal year 2017.
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I admittedly don’t know how the process works, but from a common sense perspective if your projections were too high 20 months in a row, then you’d start projecting less. Not that that would change how much you actually took in, but at least it might better predict it so you could prepare.