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Wednesday, January 12, 2005

The budget

On Monday, the state reported that it took in $66 million more in tax revenue in November and December than forecast. While this sounds like good news, and it is, it is important to look at the context. Much of the money comes from corporate income tax refunds, which is notably volatile. This is not any indication of an increase in recurring tax revenue at all, as personal income tax withholding and sales tax receipts are still below forecast.

Despite the fact that this isn't an indication that Minnesota is out of the budget woods yet, some Republicans seem to think so. On Ray Cox's blog, he joins Governor Pawlenty in citing this as evidence that our state's economy is growing. He also says, "We also have more people working in Minnesota than ever before. Each one of those workers pays payroll taxes." However, as noted, payroll withholding is below forecasts.

Obviously, the state shouldn't turn down this money, but people shouldn't blow this out of proportion. The legislature is still going to face a significant shortfall, and there just aren't many areas left to cut.

3 Comments:

At 4:52 AM, October 05, 2005, Blogger Jossie said...

Great work on your blog - it was very enlightening. You've got a lot of useful info on there about tax refunds so I've bookmarked your site so I don't lose it. I'm doing a lot of research on tax refunds exposed and have just started a new blog - I'd really appreciate your comments

 
At 3:12 PM, October 06, 2005, Blogger Squirrel said...

Your blog is great! It's hard to find blogs with good content and people talking about tax refunds these days! I have a secret tax refunds exposed if you want to come check it out

 
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