The March Economic and Revenue Forecast was presented during a joint meeting of the Senate Committee on Finance and Revenue and the House Committee on Revenue and House Revenue Committees on Feb. 22. The committees heard from state economists at the Office of Economic Analysis that there will be “additional resources available for policymakers” as they develop the 23-25 biennium budget. Compared to the December Economic and Revenue Forecast the projected ending balance is up $487.1 million. That said, analysts also noted there is still an amount of uncertainty, including a full tax cycle broaching in April and noted the office will be in a better position in the middle of May when they present the close-of-session forecast to understand actual receipts and available funds. The May Economic and Revenue Forecast will be used by lawmakers to develop the 23-25 biennial budget. The latest projections could help eliminate the projected $560 million shortfall predicted by analysts in December.
Corporate and personal income taxes remain strong, showing 25 percent annual growth over the past five years, far more rapid than underlying measures of profits would suggest. Analysts commented that with the improved baseline economic outlook, additional gains in most taxes are expected through the 23-25 biennium, with a notable exception in the marijuana tax, which is expected to fall by 11 percent due to low prices, reducing drug treatment funds.
New Facts
- Fourth quarter personal income tax collections came in $261.6 million (9.4 percent) above the December 2022 forecast.
- Fourth quarter corporate income tax collections came in $131.1 million (54.6 percent) above the December 2022 forecast.
- Fourth quarter state personal income was $1.1 billion (-0.4 percent) below the December 2022 forecast.
- Fourth quarter state employment was 6,655 jobs (0.3 percent) above the December 2022 forecast.
Change Since Close of Session
- Personal income tax revenue is up $3,557.4 million (17.2 percent) from the 2021 close-of-session estimate.
- Corporate tax revenue is up $1,545.5 million (115.0 percent) from the 2021 close-of-session estimate.
- General Fund gross revenue is up $5,483.6 million (23.4 percent) from the 2021 close-of-session estimate.
- Net General Fund and Lottery fund resources are up $6,653.6 million (24 percent) from the 2021 close-of-session estimate.
Kicker Funds Implied by Forecast
- Personal – A personal kicker of $3,938.2 million is projected for 2023.
- Corporate – A corporate tax revenue of $1,545.5 million is projected to be dedicated to K-12 education spending in the 23-25 biennium.
Revenue Changes
- Projected 21-23 biennium net General Fund resources are up $487.1 million (1.7 percent) from the December 2022 forecast.
- Projected 2021-23 Lottery Fund resources are up $16.4 million (0.9 percent) from the December 2022 forecast.
- Projected combined net General Fund and Lottery Fund resources are up $503.5 million (1.5 percent) from the December 2022 forecast.
Ending Balance
- The projected ending balance is up $4,065.2 million from the 2021 close-of-session estimate.
- The projected ending balance is up $487.1 million from the December 2022 forecast.
- The Rainy Day Fund is projected to receive $278.6 million following the 2021-23 biennium.
Contributed by: Anna Braun | AOC Contract Lobbyist, Government, Revenue, and Veterans