On Time: Year-End Revenue Aligns With Consensus Forecast | Balance
On Thursday, July 13, the Tax Commission released its preliminary year-end revenue summary report detailing collections for 12 months of the tax year. Simultaneously, the Legislative Tax Analyst and the Governor’s Planning and Budget Office produced their monthly revenue snapshot that compares collected revenue to consensus forecasts. Starting July 10thth, revenue for all sources remained stable with FY 2022 collections, as statewide revenue grew 0.8% year-over-year (year-over-year). Income and general tax collections since the latest snapshot grew 0.3%, about $100 million or <1% below consensus estimates.
As with last month’s reports, the collections reflect a moderate economy in the absence of significant intervention by the federal government. Government discretionary revenues are lower than budgeted, although well within projected ranges. The financial contingencies put in place by the embezzlers are unfolding according to plan. Part of the savvy budget employed during the 2023 general session has been an acceleration of payments to service the state’s debt (beyond required payments, which are on fairly favorable terms) and a provision for future buildings. Revenues considered « high risk » (meaning they were significantly above trend) were used. highway debt and to build the State Building Infrastructure Fund. The concept is that these appropriations could be canceled if higher priorities (or possible deficits) arise. The cushion offered by this strategy covers any deficits in the current fiscal year and also provides some flexibility for next year’s budget cycle, in the amount of $565 million one-time and $335 million ongoing.
Fund receipts increased slightly from last month’s report, up 5.8% YoY. The better results of Investment Income (+1,000% YoY) and Oil and Gas Severance Tax (+48% YoY) were unchanged. A handful of provisions for sales and severance taxes were not recorded at TC-23 this month, suggesting that General Fund deposits may be reduced slightly in the coming weeks. Collections from the Income Tax Fund decreased by as much as 4.8% compared to the same period last year. Withholding tax trailed the General Fund due to a strong job market and rising wages, up 4.9% from FY 2022. However, final income tax payments pale in comparison to last year, down nearly 30% due to lower capital gains. The Transportation Fund benefited from the travel season, along with the increase in the fuel tax rate implemented in January this year, an increase of 7.2%.
As always, the closing period (fiscal period 13) takes a few months and could increase or decrease these last figures. The LFA will release its final year-end report in October, along with its first FY 2024 revenue report.
The reports referenced in this post are available at the following links:
July Revenue Snapshot (Fiscal Year 23)
Tax Fee Revenue Summary (Preliminary Year-End/Period 12, FY 2023)
Revenue Publications Archive
