A Sharp Drop in Gross Paids Headlines the Revenue Picture through 6 Months of 2019

January 28, 2019

The Tax Commission released their 6th month TC-23 on January 22nd.  We are halfway through the fiscal year.  Through the first 6 months, the state has collected about 45% of the current revenue collection forecast.  Typically, at this point in the year, the state would have collected between 46% and 51% to reach target.

The biggest surprise was the abnormally large difference between last year’s income tax payments and this year’s payments.  With income tax withholding (10.7%) and corporate tax (64%) above target, and sales tax collections on target (5.9%), the big question is whether April’s income tax payments will be abnormally large because of federal tax reform.

Figure 1
Source: LFA analysis of the 365-day moving average of income tax gross final payments

Overall, General Fund and Education Fund collections reached $3.4 billion through the first 6 months, representing a year-over-year decline of 0.3%.  The target is $7.6 billion.  A snapshot of the collections is in Figure 2.  The figure also reports on the top right where revenue growth has been over the past 4 months.

Figure 2
Source: TC-23 Revenue Snapshot

More details of the revenue picture through 6 months is available here.