Thursday, November 03, 2005

Where's the MONEY??

So with the economy growing at a reported 3%+ last quarter and with unemployment down and with income-tax revenues in the State reported to be up, how come is it the sales-tax revenues are really off projections?

In Washington County, the amount of sales tax revenue received in October was down 11% from the same month last year. In Ozaukee County, the amount for October was down almost 4% and in September it was down almost 10% compared with a year ago.

"It defies explanation," Milwaukee County Budget Director Stephen Agostini said. Milwaukee County sales tax revenue this year is almost $1 million behind budget projections, Agostini said.

"The trend shows minimal if any growth" in sales tax revenue. "It just doesn't make sense with what's been happening in our economy," he said.

Here's a cute graph from the same story:

The concerns are echoed by officials at the Miller Park stadium district, who have become so alarmed by the district's shortfall that the executive director says the sales tax used to pay for the stadium might have to be extended past a 2014 sunset. [We knew that already; there are plenty of toys we will buy for the Brewers regardless of tax revenues...]

The State's numbers could be bad--there was a problem with the computer program in 2003.

Or the State could be massaging the numbers to pad BagManJimbo's budget numbers.

Or--even worse--the numbers could be accurate, which then gives cause to question the "economic recovery" noises. Here it is useful to note that inflation-adjusted real income for wage-earners is at the lowest since 1998:

The purchasing power of weekly wages plunged -1.2% in Sept to the lowest levels since June 1998. Hourly wages fell to their lowest since January 2001. This is very bad news for consumers who had already been spending more than their incomes since June. These wage data cover 81% of the private sector workforce, 91.4 million jobs.

...and the recent (national) figures are not so beautiful, either:

Real spending fell another -0.4% in Sept. after falling -1.0% in August. The purchasing power of per capita disposable income regained about 2/3 of its Aug. losses in Sept. but is still -0.7% below pre-hurricane July levels and back to levels of last Oct. [McMillion]

...and finally, this:

"Most [Federal Reserve] Districts described the pace of activity as moderate or gradual...a number of Banks reported that retail sales were either below plan or weak. Auto sales fell throughout the Districts.


2 comments:

M.Z. Forrest said...

Part of the explanation lies with depressed car sales after the big promotions ended.

Dad29 said...

Yeah--a part. Car sales/October were only 14.7MM annual rate, off from the more-typical 16MM.

But 10 or 20% off sales-tax revs? There's more to the story.