R.I. general revenue posts $27.6M shortfall in March
THE R.I. DEPARTMENT OF REVENUE reported Tuesday that the state's general revenue collections fell 8.3 percent short of projections in March, results that Director of Revenue Rosemary Booth Gallogly called "sobering."
PROVIDENCE – The R.I. Department of Revenue collected $27.6 million less than expected in March, meaning the monthly total general revenue of $305 million fell 8.3 percent short of the $333 million originally projected, the department reported Tuesday.
The $27.6 million shortfall primarily resulted from a 25.8 percent drop in personal income tax revenue compared with state expectations. Rhode Island collected $39 million in personal income tax last month, $13.6 million less than the $52.6 million estimate established at the state’s November 2013 Revenue Estimating Conference.
The only revenue source that improved over earlier projections in March was the sales and use tax, which took in $404,027 more than expected, an increase of six-tenths of a percent that came nowhere near offsetting the more significant shortfalls in personal income tax, departmental receipts, lottery transfer and all other general revenue sources.
“The results for March are sobering,” said R.I. Director of Revenue Rosemary Booth Gallogly in the report. “Part of the shortfall for the month may have been due to the later than normal start of the federal income tax filing season, but that fact in and of itself is probably not enough to account for all of the shortfall.”
R.I. Tax Administrator David M. Sullivan said Tuesday that the Division of Taxation processed five personal income tax refund batches in March, when typically there are only four refund batches processed in March of a given year. In fiscal year 2014, refund batches have averaged approximately $15.7 million, so the extra refund batch processed in March could help to explain the discrepancy between expected and actual personal income tax revenue, Sullivan said.
While the March data showed a marked revenue deficit, fiscal year-to-date revenue data painted a more stable picture of Rhode Island’s general revenue situation. Since July 1, 2013, the state has collected $2.221 billion, $1.9 million (or one-tenth of a percent) less than the $2.223 billion projected for the nine-month period. While Gallogly said total general revenues are in line with expectations, with sales use and personal income tax revenue “essentially on target,” she acknowledged that the downward trend is troubling.
“Unfortunately, the cushion we had built up since September has eroded and very little leeway is available as we move forward,” Gallogly said.
Lottery transfer revenue has shown the largest shortfall in the nine months between July and March, bringing in $246 million, or $9.5 million less than the $255 million anticipated, a difference of 3.7 percent. The sales and use tax drew four-tenths of a percent less than projected for the fiscal year-to-date, but all other revenue sources have remained on track with or slightly exceeded the state’s estimates.
The March revenue assessment report was the second such report issued by the R.I. Department of Revenue. The February report conveyed a less severe revenue situation, with fiscal year-to-date revenues exceeding estimates by 1.4 percent and February monthly revenue 6.5 percent greater than initial projections.
A fiscal year shortfall in general revenue would mean less money for state legislators to work with when drawing up the fiscal year 2015 budget. Gov. Lincoln D. Chafee’s proposed $8.5 billion budget, unveiled in January, calls for a $104.3 million increase in state general revenue spending.