County Income Tax Distributions Up, Still Subject to Volatility

According to the Comptroller’s electronic message, the June distribution of local income taxes  totals $720.3 million, a 4.2% percent increase over the prior year. This distribution has three separate income tax
components:

● the tentative final distribution for tax year 2011;
● the projectedApril/May withholding and estimated tax receipts for tax year 2012; and
● the estimated unallocated distribution for tax year 2011 and the reconciliation for the unallocation for tax year 2008.

The June distribution also includes the final installment of the statutory disparity grant for fiscal year 2012, which totaled $29.9 million.

From the electronic message:

The tentative final distribution for tax year 2011 represents the first reconciling distribution for tax year 2011 returns, reflecting returns processed and posted to the tax system by early June.  This component of the distribution fell 44.6% to $21.1 million, for counties.  Two counties that received a tentative final distribution last year will not receive one this year, and most other counties saw a substantial decline in the distribution. As always, reconciling distributions can be volatile, as they depend on the prior tax year’s pattern of payments and the current tax year’s payment and tax return filing patterns.

The projected April/May withholding and estimated tax receipts  is based on a projection of income tax withholding and estimated payments attributable to April and May 2012 and totals $554.1 million for counties.  An estimate is necessary because processing of the payments for this period is not completed until after the end of June. Withholding and estimated payments are expected to grow about 2.5% over last year’s projected amount.  After accounting for the reserves, local tax percentage and cost of administration, the local tax for distribution increased 6.7%.

The estimated unallocated distribution for tax year 2011 and the reconciliation for the unallocated distribution for tax year 2008 represents the estimated amount of the unallocated distribution (remaining revenue not claimed on tax returns three years after the end of a tax year) for the most recently completed tax year along with a reconciliation with the estimated amount that had been distributed for the third prior tax year. The total distribution is $155.3 million, a decline of 0.3%.

If you have any questions about the June distribution, please contact William Blum of the Revenue Administration Division at (410)260-7501.

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