PHOENIX - Legislative budget officials on Thursday warned Arizona legislators that January tax collections were well below expectations and that there apparently will be a new midyear state budget shortfall beyond the one just closed.
State revenues in January, which included sales-tax revenue from most of the year-end holiday buying season, were 21.5 percent below January 2008 collections and nearly 36 percent below those for January 2007, the Joint Legislative Budget Committee staff reported.
"There is obviously a lot of instability in the economy," Executive Director Richard Stavneak said. "The January results are significantly worse than we had expected."
The Legislature just two weeks ago approved spending cuts and other changes to close a $1.6 billion shortfall in the then-$9.9 billion budget.
Senate Appropriations Chairman Russell Pearce, R-Mesa, said the new data is "pretty alarming" and signals that lawmakers didn't do enough belt-tightening in their first attempt.
Stavneak said it's too early to make a new shortfall estimate, but that lawmakers should start planning for one.
A high end for now could be $425 million and a low end $250 million, Executive Director Richard Stavneak said.
The budget staff plans to meet in March with economists to get their prognostications, and Stavneak said key unknowns going forward include levels of April tax payments, effects of the federal economic stimulus package nearing passage by Congress and job losses' impact on income-tax withholding.
January sales tax collections were 13 percent below January 2008, individual income tax payments 42.6 percent below and individual income tax withholding 14.7 percent. Together, the reductions constituted "a pretty significant decline," Stavneak said.
The poor housing market and stock market apparently combined to slash capital gains normally seen in January, he said.
The new year-over-year drops were particularly troubling because January 2008 tax collections were already well below the previous year, Stavneak said.
The $425 million high-end figure is not a new shortfall estimate, according to Stavneak. But, he said, "I think we do need to begin thinking about were the problem as great as $425 million, how we would we got about solving it."