State revenues exceed forecast, but possible slowdown foreseen

07/11/2006

Star Tribune
July 11, 2006

State revenues are up slightly, but economists now expect the national economy to slow down the second half of the year, according to the state’s July economic update.

A boost in both individual income tax receipts and corporate tax revenues contributed to overall state revenues that are 3 percent above what had been forecast in February.

State revenues now are expected to total $15.5 billion - $447 million more than expected - for fiscal year 2006, which ended June 30.

But a weakening housing market and “less than robust” job growth nationally will slow things, as will oil prices, which are expected to stay high for the foreseeable future, and creeping inflation, according to Global Insight Inc., the state’s national economic consultant.

Individual income tax revenues are 3.9 percent above forecast, while corporate tax revenues soared 11 percent beyond what had been projected. Sales tax revenues, the state’s third major funding stream, remained flat.

State revenue officials cautioned that updates do not show an actual increase in funds available. That won’t happen until the state issues a new two-year economic forecast in November.