March Revenue Collections Decline, Overall Revenues on Target through Three Quarters

TRENTON – The Department of the Treasury on Friday reported that March revenue collections for the major taxes declined by 12.8 percent from last March.  This decline was largely anticipated and is included in the Treasurer’s recently revised revenue targets for FY 2018.  Year-to-date, total revenues are up $1.327 billion, or 7.1 percent.

The Gross Income Tax (GIT) was down $102.7 million, or 19.8 percent, due to approximately $180 million in withholding payments that shifted into a prior month because of the timing of payment due dates.  Year-to-date, the GIT, which supports the Property Tax Relief Fund (PTRF), is up $1.032 billion, or 11.7 percent through the end of March.  The Treasurer revised the GIT year-end target upward by $598.1 million, reflecting the improved overall performance so far this year.   The GIT accounts for 78 percent of total FY 2018 growth in the major revenues.

Meanwhile, in the General Fund, the sales tax was down 1.9 percent in March, but with 1.5 percent growth year-to-date this tax is on target with Treasury’s revised estimate.   The corporation business tax declined sharply, off 38.7 percent for the month and is now down 8.6 percent for the year.  Some of this weakness may be due to corporate tax behavior in response to the changing federal tax rates under the Tax Cut and Jobs Act.

A number of other General Fund revenues such as the estate tax, the realty tax, and motor fuels and petroleum taxes were also down in March, reinforcing a key point of Treasurer Muoio’s recent testimony before the legislature’s budget committees on April 10 and 11.  The state faces a difficult structural imbalance between the revenues supporting the General Fund and the revenues supporting the dedicated PTRF.  This long term trend has only accelerated in recent years and is apparent in the year-to-date collections pattern through the end of March.

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