DALLAS — Louisiana’s Revenue Estimating Conference on Tuesday adopted an official revenue estimate for fiscal 2012 that shows only slight relief for next year’s $1.6 billion budget shortfall.
The revenue panel approved an official revenue forecast of $8.26 billion in fiscal 2012, up $65.8 million from June 2010’s $8.2 billion. The conference also revised the fiscal 2011 revenue forecast up to a total of $7.83 billion, an increase of $112.2 million from last June’s $7.72 billion.
The estimating conference opted for the revenue predictions by the Legislative Finance Office rather than the numbers developed by the Department of Administration. The department estimated fiscal 2011 revenue at $7.82 billion and 2012 collections at $8.3 billion.
Gov. Bobby Jindal will use the revised fiscal 2012 estimate to develop the proposed operating budget for next year. He will present his fiscal 2012 executive operating budget to lawmakers on March 11. The Legislature will convene April 25.
The higher official estimate only slightly reduces the budget shortfall that had been expected to reach $1.6 billion. The gap, which persists despite higher revenue, is the result of higher health care and other social service costs, and the loss of federal stimulus funding.
Collections in fiscal 2012 are expected to include $2.67 billion of sales tax revenue, an increase of $217.9 million from the earlier estimate, and $2.82 billion from the individual income tax, an increase of $72.5 million from the earlier estimate of $2.74 billion.
Sales tax revenues are expected to total $2.58 billion in fiscal 2011. The individual income tax is forecast to bring in $2.6 billion. The previous forecast called for $2.4 billion from the sales tax in 2011, and $2.47 billion from the individual income tax. General fund collections in fiscal 2010 totaled $7.2 billion. Sales tax revenue totaled $2.36 billion, with the individual income tax generating $2.2 billion.
Greg Albrecht, chief economist for the Legislative Fiscal Office, said the brightest spots in Louisiana’s revenue picture are collections from the sales tax and the individual income tax. Sales tax collections were up 19% in February from 2010 collections, he told the panel.
“The sales tax has been up 16% to 18% from fiscal 2010 for the past five months,” Albrecht said. “We think the sales tax will show a 9.3% increase this year over the earlier forecast, and we’re raising the forecast for fiscal 2012 by 3.4%.”
He said continued strength in the individual income tax led him to increase his forecast from that source in fiscal 2011 by an additional $154 million, and by $72 million in fiscal 2012.
“February’s numbers are a little down from January, but this is still one heck of an income tax year,” the economist said. “We have a modest forecast for fiscal 2012, but I can safely say that the gains will exceed expectations.”
Weak spots in the revenue picture include the production tax on oil and natural gas, and the corporate income tax, according to Albrecht. Revenue from the severance tax on oil is up due to the increase in the market price, he said, but a collapse in gas production has lowered the total.
Collections from the corporate income tax were healthy for most of fiscal 2011 through the end of calendar 2010, Albrecht said, but large refunds in January and February wiped out most of that.
“We’re down from $290 million as of December to only about $14 million right now,” he said. “I’ve never seen a net-negative year yet, but we’re only $14 million away from that.”
Albrecht reduced his estimate for corporate tax revenues to $200 million in fiscal 2011 from the earlier expectation of $371.8 million. “I think we’re a lot closer to a net negative than we are to that $200 million,” he said.
The panel lowered the official estimate for fiscal 2012 corporate tax collections to $255 million from the earlier $381.2 million.