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A ray of hope in state revenue outlook

• Published April 14, 2009

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The latest state revenue report released Monday shows another $55 million drop in state tax collections for March. That's $55 million less than past forecasts predicted for the period.

But there is more to this report, and the opening words from state revenue forecaster Arun Raha are almost jarring after the 15-month drumbeat of bad news about state revenues:

OK, so that is what passes for good news at a time state lawmakers are trying to agree on how best to whack $4 billion from state programs in order to balance a budget that is still expected to have more revenue in the next biennium than in the one that ends on June 30.

Raha's report mentions that equity markets have rallied 25 percent since March 10, consumer spending is "showing signs of stabilizing," and sales of homes "saw an uptick in February, as did housing permits and pending home sales." Although he also cautioned that consumer confidence is still near a record low, credit markets are not yet put right and job losses continue at high levels, he thinks credit markets are key to recovery and should return to a more normal state late this year.

And he said the state data he's looked at do not yet reflect the "green shoots" of recovery seen in national data recently. Moreover, in a mournful nod to those looking for work, Raha says it's likely that jobs will continue to disappear "even after a recovery is under way," which means job losses will continue through year’s end though at a slowing rate.

Revenue collections for March fell $55 million from the $758,745 level predicted in March, representing a 7.3 percent shortfall, the report shows. Retail sales collections, which are the biggest source of state revenue, were down 19.8 percent compared to March 2008 levels, and business-occupations tax collections were down 10.1 percent year-over-year.

Having said all that, I suspect you've already forgotten the ray of hope in the opening paragraph.