Canary in the Budget Coal Mine
Wednesday, September 20, 2006 :::
State tax receipts rose nearly twice as fast as projected in the beginning of the new fiscal year. But August's numbers fell 4.3 percent lower than July's. The dropped is passed off by Finance Secretary Jody Wagner as "reflect[ing] anomalies in payment and refund activity, as well as an apparent slowing in recordation and sales and use tax collections in August 2006."
August may indeed be relatively unimportant. But there are signs that the revenue gravy train may be slowing down:
The August report's 2.1 percentage-point reduction in sales-tax collections mirror July sales. "The slowdown in the housing market, rising interest rates and higher energy prices appear to be affecting retail sales"...
Early in the Sorensen program, Wagner showed the class a series of charts on state revenues. They rose substantially right before presidential elections and cooled markedly not very long afterwards. And when Uncle Sam stops spending, Virginia tends to go begging -- particularly Northern Virginia. When I mentioned this pattern to Wagner, she said her office had never looked at the numbers that way before.
Maybe it's time they should. While one month's numbers hardly make a trend, if a similar downturn appears in September, then it's possible Virginia could be in for a very rough economic patch sometime in the next year or so.
Perfect timing for Mark Warner.
::: posted by Norman Leahy at 9/20/2006