CHICAGO -- With income taxes boosting state revenues across the Midwest, Ohio, Nebraska and North Dakota all expect to have record-high rainy day funds heading into a new fiscal year.
Most of the states said the bulk of the higher-than-projected revenues came from income taxes. It’s probably a one-time boost, caused by individuals and businesses making transactions in 2012 to sidestep rising 2013 federal tax rates.
Governors from Ohio to Minnesota and Indiana touted the surpluses. In Ohio, Gov. John Kasich called a press conference to have reporters watch live as a check for $995 million was deposited into the state’s rainy-day fund.
The deposit boosted the fund to an all-time high of $1.48 billion.
The Buckeye State’s 2013 surplus actually totaled $2 billion, but lawmakers tapped about $500 million to help pay for new tax cuts, including a 10% income-tax cut.
The deposit raises Ohio’s fund from $482 million last year. It totaled $247 million in fiscal 2011 and a mere 89 cents in fiscal 2010.
“It means that in the middle of the year, when the Legislature at times has been forced to cut programs, affect the schools, bring real uncertainty and confusion and chaos, we now have the money in this operation to stabilize the operations of the state of Ohio,” Kasich was quoted as saying in local media reports.
Nebraska’s rainy-day fund is expected to rise to a record $680 million, after 2013 revenues rolled in nearly 8% above the state’s expectations.
The state collected $4.1 billion in taxes during fiscal 2013. State law dictates that any amount over the forecast must go into the state’s reserve fund.
Like most states, Nebraska officials attributed the bulk of the excess -- $125 million -- to income taxes. Individual income tax revenues were 13% higher than the 2012 forecast, and corporate income tax receipts were almost 20% higher.
Gov. Dave Heineman renewed his call for broad tax reform after fiscal officials released the year-end revenue numbers. Heineman proposed an overhaul of the state’s tax code last year, but legislators balked and opted instead to form a Tax Modernization Commission. The commission began meetings last week to examine a host of revenue-neutral tax changes to craft recommendations for state lawmakers next year.
“Tax relief should be the top priority of the next legislative session,” Heineman said in a statement.
North Dakota, which is enjoying one of the strongest economies in the country due to oil revenues, said it expected to end the year with revenues up 48%, or $1.6 billion, over 2011 revenue estimates.
The state is expected to have a $1.7 billion surplus by the end of its fiscal 2013. The report from budget officials reportedly frustrated some lawmakers, who said projections need to be more accurate.
North Dakota lawmakers in May had a difficult time crafting a new two-year budget, in part because of bickering over how to spend the additional revenue.
Minnesota officials said last Wednesday that 2013 revenues came in $463 million ahead of the forecast.
Of that, 70% came from income tax payments. The money will be used to repay school districts for payments withheld to balance budgets in previous years as stipulated under a bill enacted during the last legislative session. “More work remains but we have made important progress,” Gov. Mark Dayton said in a statement.
Indiana Gov. Mike Pence said the state took in about $130 million more than expected by year-end, and that he plans to use most of the money to pay off bonds.
Michigan’s new fiscal year doesn’t start until Oct. 1. The state reported that last month’s revenues exceeded expectations by $99.3 million. Illinois’ comptroller Tuesday put out a report saying state generated $1.3 billion more than expected in taxes during the spring.