Bleak Budget Could Cost Shoppers
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You might have to continue tightening your belt. The sales tax cut might not happen.
Things were supposed to be a little brighter in January. That was when shoppers were going to get some relief at the cash register -- a half-percent sales tax cut.
But, you might have to hold off on getting that big HDTV. The shopping relief might not happen because the state budget deficit just keeps growing.
The state budget could reach $624 million in deficit for the current fiscal year, State Comptroller Nancy Wyman, said on Monday. That painful figure is $235.5 million higher than the governor’s budget office predicts, and a deep enough hole to cancel out cutting the sales tax from 6 percent to 5.5 percent in January.
Total revenue for the year is down by $407.6 million, more than double the revenue drop that would trigger the cancellation of a planned half-percent reduction in the sales tax, from 6 percent to 5.5 percent, Wyman said .
"I wish I had better news about the revenues and the implications for a sales tax cut," Wyman said in a news release, "but my projection is based on actual tax collections and underlying economic trends that cannot be ignored."
The biggest drop in the income tax was in tax payments, which is made quarterly by investors and others based on their estimated year-end income, including annual bonuses. Those payments were down 29 percent in September.
Gov. M. Jodi Rell had opposed the contingency tax cut, saying that consumers needed the tax relief without any caveats.
Posted Tuesday, Nov 3, 2009 - 8:51 AM EST
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