Revenue report shows improvement in Arizona economy - East Valley Tribune: Business

Revenue report shows improvement in Arizona economy

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Posted: Tuesday, August 21, 2012 6:30 am | Updated: 11:05 am, Thu Sep 6, 2012.

There are new signs that the state's economy continues to improve.

A report by the legislative budget staff shows sales taxes paid to the state last month of nearly $321.9 million, exclusive of the 1 percent surcharge. That is 4.9 percent increase over the same period a year earlier.

Potentially more significant, the report by Joint Legislative Budget Committee shows a 6.8 percent year-over-year boost in retail sales. And that is a sharp turnaround from the 2.5 percent decrease between June 2011 and a year later.

But Marshall Vest of the Eller College of Management at the University of Arizona said the figures are no particular reason to celebrate.

"The 'improvement' is really a return to normal,'' he said. "The 6.8 percent gain is about what one should expect.''

And Vest said that 2.5 percent year-over-year decline for June -- along with a similar slip the prior month -- was more a statistical aberration.

What happened, Vest, explained, is that there were "reporting issues'' that made the 2011 numbers unusually large. That made the 2012 figures for May and June anemic in comparison.

And Vest stressed that year-over-year loss "was not due to economic forces.''

The same report also shows individual income tax collections of $287.9 million.

That mainly reflects withholding from worker paychecks. And the report suggests that jump -- 11.5 percent over the prior year -- may reflect the growth in the number of people with jobs.

Dennis Hoffman, economist at the W.P. Carey School of Business at Arizona State University said the revenue figures are "consistent with a modest expansion of the economy.'' But he said nothing much should be read into figures for just one month.

"Monthly volatility can occur for a host of reasons,'' he said.

In other areas of the economy, the legislative budget staff report says corporate income tax collections were $20.8 million in July. That is nearly 19 percent below last year.

But staffers noted that July is typically a low collection month for corporate taxes, making the percentage difference not very meaningful.

The report also says that Lottery ticket sales in July were $49 million, about 7 percent above the prior year.

The figures are in some ways lagging indicators of the economy, especially in retail sales.

Those numbers reflect what retailers paid the state last month. But they actually reflect sales that occurred in June.

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