the staff of the Ridgewood blog
TRENTON — The Department of the Treasury reported that August revenue collections for the major taxes totaled $1.958 billion, down $117.4 million, or 5.7 percent below last August. For the first two months of traditional Fiscal Year 2021 (FY 2021), total collections of $2.140 billion are down $374.7 million, or 14.9 percent below the same two months last year.
August collections for the Gross Income Tax (GIT), which is dedicated to the Property Tax Relief Fund, totaled $808.4 million, down $45.5 million, or 5.3 percent below last August. Year-to-date collections are down $326.6 million, or 30.8 percent.
The Sales and Use Tax, the largest General Fund revenue source, reported $890.8 million, an increase of $24.7 million, or 2.9 percent. Due to the one-month lag in Sales Tax collections, August revenue reflects consumer activity in July. This is the first month since February to report positive Sales Tax revenue growth. However, it’s important to note that the various federal stimulus programs, including the Paycheck Protection Program loans, individual Economic Impact Payments (stimulus checks), and expanded unemployment insurance benefits pumped nearly $34 billion into the State’s economy through the end of July. With all of that support now ended, the stimulus effects are expected to fade as well.
Lastly, the Corporation Business Tax (CBT), which is the second largest General Fund revenue source, reported an absolute revenue loss of $28.0 million in August, down 172.4 percent from the same month last year, due to the fact that refund payouts exceeded taxpayer payments. Year-to-date through August, CBT collections of $142.5 million are down $67.7 million, or 32.2 percent below the same period last year.
While overall collections are down sharply compared to last year, the first two months of the fiscal year are relatively small. The first important month will be September, because of the significant quarterly estimated payments that are due under the GIT and the CBT. Treasury expects FY 2021 collections to remain relatively weak through the winter months, followed by a return to collections growth next spring and summer as the COVID-19 induced recession eases, barring a second wave of the pandemic.