Minnesota tax collections were 25% higher than anticipated in January with income from corporate taxes responsible for much of the jump, although state budget officials urged caution when reviewing the monthly numbers.
Corporate franchise tax collections were $642 million more than predicted last month and general sales tax dollars were $2 million more. Other revenue to the state was up $46 million over expectations. However, money from individual income taxes was $42 million less than anticipated.
The revenue will impact the state's budget surplus, which is currently projected at a historic $7.7 billion. That estimate from a few months ago will change when economists and budget officials present an updated version in the next month that also takes government spending and a variety of other factors into account. The upcoming forecast will guide spending decisions at the Capitol.
Following the January numbers release, House Republicans tweeted that there is a possibility the surplus could exceed $10 billion, and argued against raising taxes on businesses.
For the fiscal year that started in July, tax receipts are nearly $1.5 billion more than forecast, Minnesota Management and Budget Commissioner Jim Schowalter wrote in a memo announcing the numbers Thursday.
However, he added that a large part of the individual and corporate tax collections from the past couple of months are pass-through entity tax estimated payments. They will be credited against business owners' individual income tax liability, reducing final income tax payments and increasing refunds this year.
"We estimate that about $1.2 billion of the fiscal-year-to-date overall variance arises from the [pass-through entity] timing shift," he said.
In his letter announcing the numbers, Schowalter urged people to be cautious as they look at the monthly revenue reports.
"Wide swings in variances may be caused by variations in the rate at which receipts are received and processed and differences in the rate at which refunds are issued," he wrote.
