Treasury: February Revenue Collections Down 5.6 Percent

(TRENTON) – The Department of the Treasury reported today that February revenue collections for the major taxes totaled $2.868 billion, down $169.7 million, or 5.6 percent from last February. Fiscal year-to-date total collections of $26.457 billion are up $607.1 million, or 2.3 percent over the same period last year.

February collections for the Gross Income Tax (GIT), which are dedicated to the Property Tax Relief Fund, totaled $1.395 billion, down $43.9 million, or 3.1 percent lower than last February. The decrease in revenues was primarily attributable to weaker estimated payments compared against an unusually high level from last February, though net collections were supported by growth in employer withholding payments. Fiscal year-to-date collections of $11.222 billion are up $423.2 million, or 3.9 percent.

The Sales and Use Tax (SUT), the largest General Fund revenue source, totaled $884.1 million, an increase of $39.2 million, or 4.6 percent above last February. The month of February, which reflects January consumer activity due to a lag in reporting and payment, is typically one of the lowest months of the year for SUT collections. Fiscal year-to-date collections of $7.621 billion are up $440.7 million, or 6.1 percent over the same period last year.

The Corporation Business Tax (CBT), the second largest General Fund revenue source, totaled negative $4.5 million in February, a decrease of $93.8 million, or 105.0 percent from last year. The reduction in revenues was primarily attributable to a higher level of CBT refunds compared with last February, but final and estimated payments were also down. There are no CBT due dates in February, and net negative months have occurred several times in recent history during months without payment due dates, including in August 2020 and February 2018. Fiscal year-to-date collections of $2.609 billion are down $37.6 million, or 1.4 percent below the same period last year.

Realty Transfer Fee revenues of $39.3 million were $35.1 million, or 47.1 percent below last February’s unusually high level. Collections have now fallen for the fifth straight month year-over-year, continuing to reflect the challenging housing market. Median home prices have continued decelerating, but housing inventories remain relatively low, preventing rapid declines in sales prices. The drop in volume of home sales on a year-over-year basis remains the primary driver behind the reduced Realty Transfer Fee collections. Fiscal year-to-date collections of $345.7 million are now down $63.3 million, or 15.5 percent lower than the same period last year.

With the release of the Governor’s FY2024 Budget Message on February 28, Treasury issued revised revenue forecasts for FY2023. Due in part to strong collections growth early in FY2023, total budgeted revenue estimates for the current fiscal year increased by $3.7 billion, 7.3 percent higher than the total certified in June upon the enactment of the Appropriations Act. However, as noted in prior months, Treasury expects revenue growth to moderate in the second half of Fiscal Year 2023, particularly during the spring tax filing season when last year’s historically high collection levels are unlikely to be repeated.

The Treasurer will address State revenue projections in more detail when she testifies before the Legislative Budget Committees in the coming weeks.