Projections: Minor state revenues down, too
State fiscal experts say the revenues raised by the state’s so-called minor revenue sources will fall in the coming budget cycle ” but only by a relatively small amount.
The Technical Advisory Committee to the Economic Forum reviews those minor revenues that flow to the General Fund and will make its recommendations to the forum itself on Monday.
Altogether, those minor revenues brought in $438.3 million in fiscal year 2008. They are on track to produce $378.2 million this fiscal year for a two year total of $816.5 million.
Russell Guindon, economist for the forum and the Legislative Counsel Bureau, said the projections agreed to by the advisory committe Thursday predict minor revenues will total $84.3 million less than that ” about $732.2 million ” for the 2010-2011 biennium.
The minor revenues include all sources of general fund except the seven major taxes: Sales and use, gaming, the gaming live entertainment tax, insurance premium tax, modified business tax, real estate transfer tax and cigarette tax.
While those other sources are generally much smaller than the major taxes, some have become significant including the commercial recording fees collected by the secretary of state which bring in upwards of $70 million a year.
The advisory committee consists of Department of Employment Training and Rehabilitation Economist Bill Anderson, legislative fiscal analysts Mark Stevens and Gary Ghiggeri, vice chancellor for finance Mike Reed, budget director Andrew Clinger, local government finance committee chairman Marv Leavitt and state demographer Jeff Hardcastle.
For the most part, the members of the committee adopted agency predictions of what their revenues would be. But they modified projections for several taxes and fees where members agreed the projections were less certain.
Net proceeds of minerals, they were told, will fall as the price of gold drops. Gold has averaged $889 an ounce through the first 10 months of this year.
“Until this financial crisis shakes out, we don’t know how soon people are going to move back into paper instead of precious metals,” Guindon said.
But he and Maud Naroll, chief planner for the budget office, said the price of gold is on its way down. Lynne Knack of Taxation said miners are predicting gold will drop even lower than the $722 it was the other day.
And as it falls, she said, miners may reduce the mining activity at some mines until prices rise again, resulting in a further decrease in revenues from the minerals tax.
The committee projected minerals revenue would drop from $34.7 million in 2008 to $33.5 million this year, $28 million in 2010 and $26.5 million in 2011.
The other major change in revenues, Guindon said, is in the treasurer’s office interest income, which hit $55.8 million in 2008. The projection for this year, they set at just $16.4 million followed by $7.1 million in 2010. Then, they agreed, interest earnings will begin to climb again in 2011 to $11.5 million.
Mark Weinbarger of the treasurer’s office told the committee the federal interest rate is now down to 1 percent and the short-term overnight interest rate is at just one-third of a percent.
Assembly fiscal analyst Mark Stevens said he agreed with the gloomy projections for this year and next but that consultants Global Insight are predicting a recovery in F2011 and potential interest earnings of 3.59 percent.
The committee decided to tentatively approve projections a middle-ground improvement in 2011 but to revisit interest income before the Economic Forum makes its final projections in December.
Preliminary projections will be presented to the forum Monday for both the minor and major revenues.
– Contact reporter Geoff Dornan at firstname.lastname@example.org or 687-8750.