The Department of Revenue yesterday announced a $933 million tax collection for the month of February, which was $70 million less than February of a year ago and $46 million below benchmark.
What that tells you is that DOR expected to collect less in February than was collected a year ago, but that the dip in collection turned out to be greater than expected. To have met benchmark, the collection needed to total $979 million, which still would have been $24 million less than last February's collection of $1.03 billion.
This is the first time in 18 months that there has been a significant decline from the current month's collection to the same month's collection a year ago. In September of 2009, the collection was more than $300 million below that of September 2008.
So what do the February 2011 numbers mean? Even after removing the rose-colored glasses and foregoing a Pollyanna view, not much. February is the smallest monthly collection of the year. And it was a month in which DOR did not think, to begin with, that it would hit last year's collection mark.
For one, DOR saw a shift in withholding revenue collection of from $75 million to $85 million from February to January, due to the timing of receipt of withholding collections.
Second, there is no longer revenue coming in from the sales tax on alcohol, which represents a loss in February of between $7 million and $8million.
Third, sales tax revenue was flat, due not only to the factor mentioned above, but also due to bad weather. Sales tax collection reported in February is actually collected in January but not remitted until February. You will recall plenty of stories from January about snow-burdened roofs that caused some retailers to close, and lots of days when parking lots were empty of cars but full of snow. The sales tax collection from retailers was down $8.1 million from the same period a year ago.
Fourth, taxpayers started to receive their tax refunds; more money for taxpayers, less for the Commonwealth. The payment of refunds in January was slow; the opposite was true in February. Probably a factor here was the IRS advice to those who itemize to wait to file until Feb.14, due to tax law changes made late last year when the Obama Administration and Congress agreed to keep the Bush-era tax cuts and made some other changes.
Finally, corporate and business tax collections were down $34 million from a year ago, with some of that due to corporate tax refunds.
Put it all together, and you get one rather anemic month for revenue. Collections are still running $1.021 billion above those of a year ago, an increase of 8.8 percent, but February was not a contributor to that performance.
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