Figure 5

With respect to All Funds receipts, when compared to General Fund receipts the share of Personal Income Tax receipts is lower. User Taxes, however, increase by almost the same amount. This is due to the fact that All Funds User Taxes are approximately $2.7 billion higher than General Fund User Taxes because of significant amounts of dedicated revenues.

Over the past several years, the popularity of dedicating tax revenues for specific spending purposes has increased. This reliance on dedication will affect General Fund revenues by reducing the General Fund tax base. However, the transfer of tax revenues from one fund to another has no net effect on the overall level of All Funds revenues. Figure 6 displays the difference, over time, between General Fund revenues and All Funds revenues. As can be seen in Figure 6, over the past few years the difference has escalated, representing the fact that additional dedication of General Fund revenues has occurred.

Last year, the Legislature enacted the School Property Tax Relief program (STAR). This program requires the State to reimburse school districts for property taxes forgone by the local exemption. This requires a State disbursement of $724 million in State Fiscal Year 1998-99, and over $2.5 billion in State Fiscal Year 2000-01. The Executive has submitted with the Budget legislation that would dedicate this $724 million from the Personal Income Tax to the Special Revenue Fund in State Fiscal Year 1998-99. Figure 6 denotes this additional dedication.

In addition to this $724 million in Personal Income Tax dedication in State Fiscal Year 1998-99, there is a dedication of $30 million from the Motor Vehicle Fees to pay for the proposed 25 percent reduction in vehicle registration fees, and an additional $17 million dedication from the Petroleum Business Tax to pay for previously enacted tax cuts, and to hold Special Revenue Funds harmless.

 Figure 6

On an All Funds basis, the Committee Staff projects State Fiscal Year 1997-98 tax receipts will grow by 6.1 percent, totaling $39,313 million. Non-General Fund taxes, or taxes that are dedicated to specific purposes, are projected to total $4,426 million, reflecting growth of 7.7 percent, or $318 million, over State Fiscal Year 1996-97.
 
 

The State’s Fund Structure The All Governmental Funds is comprised of four major fund types, and Federal Funds.  The four funds include:  The General Fund, which is the largest of the four funds, is the State’s primary management fund.  The General Fund includes the majority of the State’s tax receipts, except for dedicated revenue, which is required by law to be deposited into another fund;  The Special Revenue Fund accounts for tax receipts and other revenues, which are dedicated for spending purposes specified by the Legislature or other parties;  The Capital Projects Fund consists of revenue derived from bond issuances, dedicated taxes, Federal grants, and transfers from the General Fund.  The revenue is used for costs associated with the construction of roads, bridges, and other capital projects, and for grants and advances of capital construction costs incurred by local governments; and  The Debt Service Fund, which consists primarily of dedicated tax revenue, is used to pay the principal and interest on long-term bonds issued by the State.  Transfers from the General Fund support debt service payments for general obligation debt and certain lease/purchase and contractual obligation payments paid via the General Debt Service Fund.  For purposes of Revenue Consensus, All Funds only includes tax revenues and lottery receipts deposited into these four funds.

 

In State Fiscal Year 1997-98, additional tax revenues will be dedicated for specific spending purposes. For example, $87.0 million from the Real Estate Transfer Tax will be dedicated to the Environmental Protection Fund, with the remainder dedicated to paying the debt service requirements on the 1996 Clean Air/Clean Water Bond Act. Prior to State Fiscal Year 1995-96, all Real Estate Transfer Tax revenues were deposited into the General Fund. Additional tax dedications will also occur in the Corporate and Utility Tax, where the percentage of revenue dedicated to the Mass Transportation Operating Assistance Fund will increase.

In State Fiscal Year 1998-99, the Committee Staff forecasts All Funds taxes to total $38,033 million, which is $2,103 million higher than State Fiscal Year 1997-98. However, Non-General Fund taxes are forecast to total $4,559 million, reflecting growth of 3.0 percent, or $133 million, over State Fiscal Year 1997-98. Total All Funds receipts are estimated to total $42,005 million, representing 6.8 percent growth.

Again, this forecast is based on the belief that the current economic expansion will continue through the upcoming State Fiscal Year, although growth will be tempered somewhat from the robust pace of the current fiscal year.