Comptroller Peter Franchot backed off the gloomy revenue forecasts he made after sales tax collections dipped in March and said tax collections are now back on target for the rest of the fiscal year.
In a May 7 letter to the governor and General Assembly leaders, Franchot said: “The individual income tax performed very well in April and the sales tax rebounded after a disappointing March. Other revenues are performing essentially as expected.”
“Many downside risks to the economic and revenue forecasts still predominate,” Franchot said, “although the fact that the individual income tax filing season went somewhat better than expected removes a major risk to the fiscal 2007 general fund forecast.”
Sales tax revenues were up 2.8 percent in April, after declining 3.1 percent in March, a drop that is “difficult to explain,” Franchot said. He attributed it to a fall off in construction activity.
Because of that one-month decline, sales tax revenue is below expectations this year. The long-term picture is still bleak. Franchot noted that “we still face the daunting task of addressing a $1.5 billion structural deficit” next year, and “it is obvious we should not rely on an improvement in the revenue outlook to help meet this challenge.”
