Treasury: March Revenue Collections Rise 16.9%, Income Tax Up 22.9%

TRENTON – The Department of the Treasury reported that March revenue collections for the major taxes totaled $1.822 billion, up $262.8 million, or 16.9 percent, above last March. Fiscal year-to-date, total collections of $21.098 billion are up $947.7 million, or 4.7 percent, above the same period last year.

Gross Income Tax (GIT) receipts of $510.3 million, which are constitutionally dedicated to the Property Tax Relief Fund, are up 22.9 percent compared to last March. For the month, withholding collections are up 11.9 percent and taxpayer refunds are up 6.0 percent. Even with higher refund payments, Treasury noted that these March figures are encouraging as the important April tax filing period begins.

While total year-to-date GIT collections of $9.448 billion are down 3.9 percent, or $383.3 million, the appearance of a nominal decline is misleading. As Treasurer Muoio noted in her recent testimony before the legislative budget committees, three factors combined to provide a one-time boost to last year’s GIT collections by $550 million compared to this year:

• $147 million due to an accounting change to the formula that allocates certain out-of-state partnership tax payments between the GIT and the Corporation Business Tax;
• $253 million in estimated one-time hedge fund payments last year; and
• $150 million in final state tax payments accelerated from April 2018 to December 2017 in order to beat the expiration of the uncapped federal SALT (State and Local Tax) deduction.

Correcting for this $550 million one-time boost, the adjusted GIT is up about $167 million, representing growth of 1.8 percent through the end of March.

The Corporation Business Tax (CBT), the second largest General Fund revenue source, generated $309.4 million in March, 144.2 percent above last year. Year-to-date, the CBT has generated $2.183 billion, up 101.2 percent over last year. The CBT for banks and financial institutions is up 281.9 percent so far in FY 2019, spurred in part by strong bank profits. These corporate tax revenues are expected to continue to grow significantly in FY 2019 due to substantial state and federal tax policy changes that influence tax rates, the tax base, and the timing of certain payments.

Treasury noted that it will take time to fully understand taxpayer behavior and its impact on the GIT and the CBT as a result of significant changes in tax policy at both the federal and state level over the last two years.

The Sales and Use Tax, the largest General Fund revenue source, reported $638.2 million in March, up 3.1 percent, matching the year-to-date growth rate. Total Sales Tax collections of $6.426 billion are up $193.1 million from the same period last year. Treasury is closely monitoring the slowing growth seen in February and March, which is consistent with Census Bureau reports of slowing national retail sales.

The Petroleum Products Gross Receipts Tax is up 20.8 percent over last March, and 5.0 percent, or $46.3 million, year-to-date.

Casino Revenues of $182.1 million are running 21.2 percent ahead of last year through the end of March. Sports betting has contributed $7.5 million to the Casino Revenue Fund and another $6.6 million to the General Fund through March.

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