On Monday, June 14th, the Tax Commission released their TC-23 revenue summary, detailing collections through period 11 of the 2021 Fiscal Year, along with the Revenue Snapshot produced by the Legislative Fiscal Analyst and Governor’s Office economists. In stark contrast to June of 2020, when the legislature passed appropriations bills reducing ongoing budgets, it appears this Fiscal Year will end with revenues in certain categories exceeding annual projections.
The General Fund, fueled primarily by sale and use tax, is up 10.5 percent over the same time last year. Since March, the sales tax growth rate has accelerated, increasing from 10.3 percent growth in February to 16.5 percent growth in May. This trajectory may coincide with federal stimulus actions, and perhaps reflect an increase in consumer confidence as pandemic restrictions are reduced.
The Education Fund posted a 60.6 percent growth rate over the same collection period for FY 2020. Two factors have heavily influenced individual income tax growth: federal stimulus activities and amended tax filing dates. Federal stimulus has had a positive impact on personal income, which makes comparison to previous years (even pre-pandemic) challenging. Second, the current Fiscal Year collections include 2020 and 2021 tax filings and are being compared to FY 2020 in which no individual year-end tax filings were collected. Additionally, Corporate Tax revenue has increased by nearly 95.0 percent over last year, indicating sharp increases in corporate income.
While the outlook for the end of the fiscal year is positive for Utah (with an expected budget surplus) the increased revenue may be bittersweet. Federal stimulus which has influenced upward growth in each of the state funds may also be contributing to inflationary pressure, which could result in the nominal growth measured in these reports less impactful.