News from the Tennessee Valley State, Local and National news

State tax receipts growth slows, but ‘it’s right on track’

By Phillip Rawls
Associated Press Writer

MONTGOMERY — The state government’s tax collections grew 4.6 percent during the first nine months of the fiscal year, with individual income tax collections fueling the increase, according to a state report released Tuesday.

The growth rate in total tax collections is about half the amount the state experienced during the last three fiscal years, but state officials said those were periods of rapid growth as the state rebounded from an economic downturn.

“It’s right on track of what we expected for the first nine months,” state Finance Director Jim Main said Tuesday.

Main and state Revenue Commissioner Tom Surtees said the tax collections through June 30 indicate there should be no problems funding this year’s and next year’s state budgets.

“We certainly feel like this will hold through the last quarter and through ‘08,” Surtees said Tuesday.

Income up

Individual income tax collections, the state’s single biggest tax and the largest source of funding for public education, are up 9.3 percent to $2.7 billion so far this year, according to the report issued by the state Revenue Department.

Main said that’s the result of new, higher-paying jobs being created in the state, and it’s in the same growth range the state has been enjoying since the economic turnaround started in fiscal 2004.

Sales tax collections, the state’s second biggest tax source and another major source of public school funding, are up 3 percent to $1.52 billion.

That’s below the 9 percent recorded last year, but 2006 was a record year due to rebuilding expenditures after Hurricane Katrina, Surtees said.

The revenue comissioner said that after the Katrina boom last year, he had been uncertain what to expect in fiscal 2007, but the 3 percent growth is a pleasant surprise.

Corporate income tax collections are up 1 percent to $405 million. That’s after three years of double-digit growth and indicates corporations “are holding their own” at the profit levels of last year, Surtees said.

Gas tax collections, which fund highway construction, are up 1.3 percent to $306 million so far this year. Alabama’s gas tax is a flat rate per gallon rather than a percentage, which means tax collections don’t rise with the price of gas. The 1.3 percent revenue increase means gas stations in Alabama are selling more fuel, Surtees said.

“I don’t know what the price of gasoline has got to get to before Alabamians start buying less, but we haven’t hit it yet,” he said.

No housing bubble

Property tax collections are up 8.5 percent from last year to $288 million. Surtees said Alabama was never part of the real estate bubble that saw housing prices rise rapidly and then fall rapidly in some states, with property tax collections responding accordingly.

Because Alabama missed that trend, gradual price increases for existing Alabama homes and the construction of new, more expensive homes have kept Alabama’s property tax collections rising steadily, he said.

The collections from some smaller state taxes are down, including the coal severance tax, the production tax from oil and natural gas wells, and cigarette taxes, but Surtees said income and sales taxes are the measure of how the state’s economy is performing this fiscal year.

“We are going to collect $8 billion, and $5 billion of that is sales and income taxes,” he said.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Save $84.50 a year off our newsstand price:
Subscribe today for only 38 cents a day!

Leave feedback
on this or

Email This Page