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State revenues are down 10 percent in September

State Economist Dr. Phil Pepper told the Joint Legislative Budget Committee a week ago that the long-term revenue outlook for the state was not very good.

Well, the short-term forecast looks positively dreadful.

September tax collection numbers surfaced last week, and they weren’t pretty. Overall, the state brought in $404.9 million last month, 10 percent under revenue estimates officials made only three months ago. The total shortfall for the month was just short of $45 million.

August offered a sliver of hope that the trend of monthly revenue shortages could be coming to an end. Gov. Haley Barbour said  at that time that the Cash for Clunkers program probably had a lot to do with August revenue falling only approximately 2 percent short of estimates.

September’s sales tax figures were $13.6 million, or almost 9 percent, under estimates, bolstering Barbour’s argument that Cash for Clunkers artificially inflated August sales tax collections. Individual income tax collections in September were almost 14 percent, or $22.7 million, short of what the Revenue Estimating Group, of which Pepper is a member, thought they would be.

Barbour has already made cuts to the fiscal year 2010 budget, slashing $172 million from K-12 education spending Sept. 3. Barbour, who is in the middle of a two-and-a-half week economic development trip to Asia, has said since then that more cuts are almost a guarantee. For the first quarter of FY10, revenue is already $77 million (more than 7.5 percent) shy of expectations. Judging from September’s revenue, trimming the budget will be at the top of Barbour’s to-do list when he returns home.

By CLAY CHANDLER I STAFF WRITER
clay.chandler@msbusiness.com

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