Late this afternoon, the Wisconsin Department of Revenue dumped their April revenue figures. I hadn't figured on this being very significant, given that the Legislative Fiscal Bureau had already given us a preview of the numbers with last week's estimates that said there would be no additional revenue in this budget.
But then I looked at the April revenue numbers, and they weren't as predictable as I thought. In particular, the fact that income taxes were DOWN 2.65% ($26.9 million) compared to April 2016. That's the second straight month that income taxes had a year-over-year decline after March's income taxes were down by 8.8%, which is especially bad given that March and April are two of the months that have the most tax returns, and they indicate more tax refunds than expected. It also should give you an extra level of skepticism for April's "booming" Wisconsin jobs numbers (and I already didn't trust them), as we should have seen higher income tax revenues if that was true.
Also concerning is that those tax returns aren't translating into higher consumption, as year-over-year sales taxes were only up 3.3% in March and 3.9% in April. Excise taxes are even worse- with losses of 10.6% in March, and 11.9% in April. The only thing that saved this April report, and what prevented the LFB from causing major turmoil with the state budget due to downward revenue revisions, is that corporate revenues had a major leap of nearly $40 million vs April 2016. This put corporate revenues back on track with LFB estimates after being down over 13% through March, which had it in line to fall short by $64 million.
In looking at where we stand at the end of April vs the LFB estimates, we are now pretty much in line with what LFB put out in January and stuck with in May, except for one area. Income taxes were projected to be up 3.99% year-over-year, and right now are only up 3.24%. That doesn't sound like a lot, but a 0.75% shortfall in income taxes would add up to $58 million overall. And in a General Fund budget that only has $12 million in breathing room and a $1 billion deficit in 2017-19, starting $58 million in the hole would likely require bigger adjustments over the next two years.
There are still two months left to report in the 2017 Fiscal Year, so there is still time to catch up....or fall further behind. With the bad weather this week, it sure seems like the upcoming Holiday Weekend and Summer hiring season is going to be a big factor in figuring out if we start Fiscal Year 2018 in decent shape, or if our house-of-cards budget already starts to tumble.