Both the sales tax and the income tax pulled in more revenue than originally anticipated in the February forecast, with sales tax receipts coming in $46 million ahead of forecast and the income tax bringing in $27 million more that predicted, according to Minnesota Management and Budget (MMB). But corporate tax collections were down by about $11 million this quarter, and other revenues fell $64 million short of predictions.
This is the first peak at revenue collections in the state since the DFL-controlled Legislature and Gov. Mark Dayton passed a handful of new tax increases last session, including an income tax hike on the wealthy, a cigarette tax increase and the elimination of some corporate tax breaks.
“Forecast revenues for the quarter include approximately $240 million that was expected to arise from the law changes,” according to MMB. “Actual state tax receipts during the quarter exceeded year-earlier levels by $336 million (9.0 percent).”
DFL and GOP leaders were quick to respond to the new numbers, with Republicans saying the negative projection is a sign that the newly-enacted DFL budget isn’t working.
“Governor Mark Dayton and Democrat majorities’ budget, effective July 1st, forces hardworking taxpayers to pay more when they can least afford it for excessive government spending,” House Deputy Minority Leader Jenifer Loon, R-Eden Prairie, said in a statement. “The simple fact is our state spending is far-outpacing our state’s economic growth. Today’s news is a departure from the positive trajectory state revenues have been on for the last two years.”
House Speaker Paul Thissen says an uptick in sales and income tax revenues means the “Minnesota is continuing to make progress.” “Republicans seem so desperate for Minnesota’s economy to fail that they are ignoring reality,” he said. “If they are serious about improving Minnesota’s economy they should be urging their counterparts in Washington to end the gridlock and get back to work. ”