State budget forecasters say revenues are steady, but stay worried about unemployment and a drop in income tax revenue.
If flat really is the new up in this economy, then new revenue projections from Delaware’s panel of financial prognosticators will come as good news to a state government reeling from two years of budget crises.
Numbers released Sept. 20 by the Delaware Economic and Financial Advisory Council show little change in the state’s expected revenues compared to calculations made in June.
The council, which is charged with generating the financial estimates used to prepare the state’s annual budget, increased expected total revenues for fiscal year 2011 by $24.8 million — a bump representing less than 1% of the $3.3 billion budget.
That change does not count the $38 million revenue increase that resulted from changes made by the General Assembly in the budget bills it passed in the final hours of the legislative session July 1. Those changes freed up money for the General Fund that would have gone in part to the Transportation Trust Fund, used for road improvement projects.
Estimates from DEFAC also were steady for fiscal year 2012; total revenues are expected to fall only $12.5 million short of earlier predictions.
“We’re where we projected to be back in June, we just had categories moved around a little bit,” said Finance Secretary Tom Cook.
The most notable projected revenue increase in the 2011 projections came in the bank franchise tax line, which DEFAC raised from $59.2 million to $82.4 million.
Estimated revenues from corporate income taxes were raised by $16.4 million, buoyed by slight gains in corporate profitability.
“I think the good news is that this is an indication that the banking industry is starting to recover and corporate profits are up once again, that’s another positive sign,” Cook said.
However, those increases were balanced out by a $14.8 million projected decrease in personal income tax revenues. For fiscal year 2012, DEFAC projected the income tax hole will deepen and scaled back revenue projections by $26.7 million.
The latest numbers from the Department of Labor show good reason why DEFAC isn’t bullish on income tax receipts.
Labor statistics released Sept. 17 indicate Delaware’s 8.4% unemployment rate has remained unchanged through July and August.
Behind the statewide number of 35,300 unemployed are more troubling figures.
Unemployment figures are up slightly in every jurisdiction except New Castle County, which doesn’t include Wilmington and Newark.
In Wilmington, 12.5% of people are out of work; in Dover, it’s 10.2%.
Nationwide, unemployment stands at 9.6%, up one-tenth of a percent from July.
“The concern is that the personal income tax is the category that had the largest drop, and that’s about putting people back to work,” Cook said. “Corporations are starting to rebound and the banks are starting to rebound, but they at this point have not decided to expand the employment rolls.”
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