(TRENTON) - The Department of the Treasury reported today that overall September revenue collections exceeded projected growth at the close of the first quarter of Fiscal Year 2020 (FY 2020). Collections for the major taxes totaled $3.628 billion, up $333.3 million, or 10.1 percent, compared to last September. Year-to-date, total collections of $6.143 billion are up $422.5 million, or 7.4 percent above the same three months last year.
September collections were substantially enhanced by a large one-time payment of $130 million through the Corporation Business Tax for Banks and Financial Institutions for a multi-year liability settlement.
The Corporation Business Tax (CBT), the second largest General Fund revenue, totaled $722.5 million, which is 10.7 percent above last September. Year-to-date through the first quarter, the CBT has collected $932.7 million, or 11.1 percent above last year. However, CBT growth is starting to moderate from FY 2019’s remarkable 75.0 percent increase. Growth is projected to decline further in the coming months, because significant non-recurring payments received last year are not expected to repeat, and the temporary 2.5 percent surtax rate will drop to 1.5 percent on January 1, 2020.
The Sales and Use Tax, the largest General Fund revenue source, reported $837.4 million in September, up 8.4 percent over last September. Adjusting for revenues newly collected from remote online sellers this year, underlying Sales and Use Tax collections are up approximately 5.0 percent year-to-date.
September collections for the Gross Income Tax (GIT), which is dedicated to the Property Tax Relief Fund, totaled $1.620 billion, up 5.5 percent above last September. Year-to-date GIT collections of $2.682 billion are up 3.8 percent through the end of the first quarter, matching the FY 2020 growth target.
At a recent gathering of multi-state revenue estimation professionals, concerns were expressed about several factors that may confront states as the fiscal year progresses and for FY 2021, particularly with respect to business tax collections. A major concern expressed by tax analysts is that corporations may currently be overpaying state taxes upfront while they analyze the tax base implications flowing from the federal Tax Cut and Jobs Act. In the current low interest rate environment, the cost of overpaying taxes is minimal. Accordingly, it is anticipated that corporations may begin filing for large refunds once they have a better idea of their true tax liability. Analysts also expressed uncertainty about the future path of the U.S. economy as the ongoing trade war between the U.S. and China continues to weigh on economic growth. Treasury will continue to monitor these and other future developments.